Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PETITIONS

Rent Bill

Mr. Gibson: On behalf of over 5,000 constituents and others in the Borough of Wandsworth, I desire to present a petition calling for the withdrawal of the Rent Bill. It is felt that the Bill will inflict great hardship on many families, and, in particular, on people like old-age pensioners and others living on small fixed incomes.
Wherefore, your petitioners pray that the Bill be so amended that tenants shall not be evicted from their homes unless equivalent alternative accommodation is provided; that rents shall not be increased unless dwellings are in good habitable repair with reasonable amenities and that, in default of these amendments, the Bill shall be rejected.
And your petitioners, as in duty bound, will ever pray.
I desire to ask, according to the Standing Order, that the Clerk of the House may be directed to read the Petition.

Major Legge-Bourke: On a point of order, Mr. Speaker. Before the Clerk reads this Petition, I wonder whether, as a member of the Petitions Committee— although I do not profess to speak for the Committee as a whole—I may ask whether the use of this part of our procedure in the way which is now apparently becoming the practice—[HON. MEMBERS: "Oh."]—whether this particular practice is one which fulfils the purpose for which Parliament originally designed the Standing Order? If my question is in order, I wonder whether you, Mr. Speaker, would be prepared to accept a more carefully prepared statement than I am in a position to make today?

Mr. Speaker: I remember, when the hon. Member for Oxford University—as he then was—Sir Alan Herbert, presented a Petition and desired it to be read, my

predecessor, Mr. Speaker Clifton Brown, said that it was entirely at the option of the hon. Member whether the Petition should be read or not. He added some remarks to the effect that he hoped the practice would not be indulged in too often, as, of course, it shortened the time available for Members' Questions

The CLERK OF THE HOUSE read the Petition, which was as follows:

The Humble Petition of the Undersigned citizens of Wandsworth, Clapham, Central Streatham and Putney.

Sheweth:—
That in this area there are many families to whom, despite the serious overcrowding and unsatisfactory housing conditions from which they suffer, the local authorities can offer no hope of rehousing for many years to come. In these conditions the proposals of Her Majesty's Government, in the Rent Bill now before Parliament,

(a) To grant powers to the owners of many of these houses to serve on the occupants notice to quit, or of rent increases without statutory limit,
(b) To serve on the occupants of the remaining houses notice of substantial rent increases, without any guarantee of necessary repairs being undertaken, will inflict hardship on many families and in particular on pensioners and others with small fixed incomes.

Wherefore your Petitioners pray that the Bill be so amended that tenants shall not be evicted from their homes unless equivalent alternative accommodation is provided; that rents shall not be increased unless dwellings are in good habitable repair with reasonable amenities; and that in default of these amendments the Bill shall be rejected.

And your Petitioners, as in duty bound, will ever pray, etc.

Mr. Arbuthnot: On a point of order. It was impossible for many of us at this end of the House to hear whether the Petition was addressed to this House or not. I wonder whether that was so.

Mr. Speaker: I understand that it was a Petition to this House, presented by a Member of the House.

To lie upon the Table.

Mrs. Corbet: I desire, Mr. Speaker, to present a Petition similar to that of my hon. Friend the Member for Clapham, (Mr. Gibson), on behalf of constituents and others in the Borough of Camberwell. The Petitioners are fearful of the consequences which will flow from the Rent Bill, and therefore, your Petitioners pray
that the Bill be so amended that tenants shall not be evicted from their homes unless equivalent alternative accommodation is provided;


that rents shall not be increased unless dwellings are in good habitable repair with reasonable amenities; and that in default of these amendments the Bill shall be rejected.
And your Petitioners, as in duty bound, will ever pray, etc.

To lie upon the Table.

Mr. Lipton: With your permission, Mr. Speaker, I beg to present a humble Petition, signed by 2,000 citizens of Brixton, protesting at the hardships which will be caused by the evictions and rent increases arising from the Rent Bill. The Petition is in the same terms as the others presented this day.
And your Petitioners, as in duty bound, will ever pray, etc.

To lie upon the Table.

Sir P. Agnew: May I raise a point of order, Mr. Speaker? The Rent Bill has had its Third Reading in this House and, in the event of there being no amendment made to it in another place, it will not be possible for this House to take any action on the Petitions presented to it. Is not this an indication that the procedure is archaic, if not out of order?

Mr. Speaker: The same thought occurred to me. I have had researches made and I find that on 4th November, 1909, after the Finance Bill of that year, a matter of some controversy, received its Third Reading, a Petition was allowed by the Speaker in similar terms mutatis mutandis against the Bill. So, in the absence of any Ruling to the contrary and with that precedent of an affirmative character, I felt bound to allow these Petitions.

Oral Answers to Questions — BRITISH ARMY

R.E.M.E. Camp, Holywood

Mr. Chapman: asked the Secretary of State for War why National Service men in the Royal Electrical and Mechanical Engineers camp, Palace Barracks, Holywood, County Down, are not allowed fires in their billets; why the central heating system is switched on only intermittently; and how many complaints have been made by the men in the last twelve months.

The Under-Secretary of State for War (Mr. Julian Amery): Fires are not used because the barrack rooms are centrally heated. The heating is switched off in the interests of economy during working hours when soldiers are out. A new boiler was installed last year, but this did not at first work satisfactorily. Ten complaints were received early in the winter. The faults were corrected and coal and logs were issued while this was being done.

Mr. Chapman: How does the Under-Secretary of State account for the fact: that, as late as 24th March this year, the: men were complaining that the boiler installed a year ago was still not working? Is not this the kind of thing that will make recruiting for the Regular Army impossible unless it is corrected?

Mr. Amery: I will look into the point that the hon. Member has raised.

Mr. Chapman: asked the Secretary of State for War whether he is aware that National Service men in the Royal Electrical and Mechanical Engineers camp, Palace Barracks, Holywood, County Down, have only two baths for fifty-five men, a set of showers with only three working, are allowed hot water for baths only twice per week and have to miss a bath if on guard duty; and whether he will make a statement on the conditions at this camp.

Mr. J. Amery: There are three baths and eight showers to cater for about fifty men. All are in working order. There has been hot water for baths only twice a week because of the need for fuel economy, but it is available after guard dismounting for men who have been on


guard. This camp consists of wooden huts and I am informed that conditions are generally satisfactory.

Mr. Chapman: Why is it that something happened between the Member of Parliament putting down a Question and the Minister giving an answer? Is it not the case that there were only two showers working and that only two have been working for some time? Why does not the hon. Gentleman really have facts like this checked so that men can be encouraged to go into the Army?

Mr. Amery: I think the hon. Gentleman is at fault. All have been working since February.

Mr. McKibbin: Is the Under-Secretary of State aware that Palace Barracks is very modern and up-to-date and is situated in very pleasant surroundings where the people are very hospitable and well-disposed towards the troops? I have never heard one Service man, National or otherwise, who was not pleased to be stationed there.

Court-y-Gollen Camp, Crickhowell (Hunt Meeting)

Mr. Watkins: asked the Secretary of State for War whether it is on his authority that the Monmouthshire Hounds are allowed to meet on the lawn, outside the Officers' Mess, at the Court-y-Gollen Camp, Crickhowell; and whether he will make a statement.

The Secretary of State for War (Mr. John Hare): The Commanding officer issued this invitation. It is a long-standing custom for hospitality to be offered by units to local hunts. My authority was not required.

Mr. Watkins: Is it a matter of local discretion to invite these people? Will the Minister now invite officers to have greater concern for the discipline of the camp, if he has not read in the local Press what is happening there?

Mr. Hare: I do not understand that supplementary question. I see no objection to the commanding officer using his discretion.

Mr. Watkins: asked the Secretary of State for War how many Service men and officers were detailed off for duty at the meet of the Monmouthshire Hounds at Court-y-Gollen Camp, Crickhowell, on

2nd March last; how many horses are kept by his Department, or permitted by his Department to be kept privately, at the camp; and how many servicemen are employed to look after them either inside or outside the camp.

Mr. John Hare: Three soldiers, who are mess waiters, spent about an hour serving refreshments and four soldiers controlled the traffic. Four horses are kept in a privately-owned hut at the camp. They are looked after by three soldiers who volunteered for the job.

Hon. Members: Oh.

Mr. Watkins: What kind of refreshments were served? Secondly, is the Minister aware of the anxiety among my constituents at Service men being used for the purposes described in my Question?

Mr. Hare: I was not asked the type of refreshments served, but I should say that it was probably a mixture of alcohol and soft drinks. On the second part of the supplementary question, my answer is that I am concerned that three soldiers were employed for this purpose and I am making inquiries into the matter.

Air Trooping (Britannia Aircraft)

Mr. Beswick: asked the Secretary of State for War what arrangements or commitments have been made by his Department for future trooping operations by the Britannia aircraft now on order for Her Majesty's Government.

Mr. John Hare: Arrangements and contracts for Army air trooping are the responsibility of my right hon. Friend the Secretary of State for Air, to whom I see the hon. Gentleman has put down an identical Question today.

Mr. Beswick: Can we take it that the Secretary of State for War knows who is to be responsible for trooping operations?

Mr. Hare: I suggest that the hon. Gentleman wait for the reply from my right hon. Friend the Secretary of State for Air.

General Speidel

Mr. Shin well: asked the Secretary of State for War (1) whether he is aware that 60 British soldiers were included in a guard of honour when


General Speidel was installed as Commander of the North Atlantic Treaty Organisation land forces, and that the German national anthem, "Deutschland Uber Alles," was played during the proceedings; and whether this was done with his consent.
(2) why the British national anthem was not played during the installation of General Speidel in view of the presence of British troops.

Mr. John Hare: It is the custom at N.A.T.O. Headquarters to hold a ceremony whenever a new Commander takes over, and a small international body of troops is paraded for the occasion. Detachments of British, French and American troops took part. In accordance with the normal practice, only two National Anthems were played; that of the country of the new Commander and the Marseillaise, which is played because N.A.T.O. Headquarters is on French soil.

Mr. Shin well: Did the right hon. Gentleman give his consent to these proceedings? Was he consulted, or is all the control over our forces now with N.A.T.O. Command transferred to N.A.T.O.? Has the right hon. Gentleman nothing to do with them? Does he not regard this as a disgraceful and unpatriotic thing?

Mr. Hare: In answer to the first part of the question, I was not consulted, nor do I think it was necessary for my authority to be sought for British troops to take part in this small domestic ceremony at an international headquarters. In answer to the second part of the question, the right hon. Member has made his feelings known on this point and must not get angry if others disagree with him.

Mr. McAdden: Is my right hon. Friend aware that hon. Members on this side of the House are delighted to hear of this interest displayed in the playing of the National Anthem? May we take this as an indication of the fact that the right hon. Member for Easington (Mr. Shin-well) would like to hear it played much more frequently and that probably we shall hear less of "The Red Flag"?

Mr. Hare: That may be an interesting thought, but I do not think it has much to do with this Question.

Mr. Shinwell: In view of the answer the right hon. Gentleman gave me, in which he referred to my temperament, I beg to give notice that, in view of the unsatisfactory nature of the Answer, I will take an early opportunity of putting a Motion on the Order Paper calling on the right hon. Gentleman to resign his office.

Mr. Lipton: asked the Secretary of State for War to what extent disciplinary control of British troops in Germany has been vested in General Speidel.

Mr. John Hare: No disciplinary control of British forces in Germany is vested in General Speidel.

Mr. Lipton: Is the right hon. Gentleman aware that his answer will be received with much satisfaction by all those who would not like to see any German officer in a position to impose disciplinary penalties on any British troops?

Regimental Bands (Full Dress)

Mr. Leavey: asked the Secretary of State for War whether he will authorize the wearing of full dress by regimental bands when playing in public in
those cases where sets of such uniform exist.

Mr. J. Amery: No, Sir. As I explained in answer to a similar Question by my hon. Friend the Member for Blackley (Mr. E. Johnson) last Tuesday, full dress is obsolete except for the Household Brigade and the King's Troop Royal Horse Artillery.

Mr. Leavey: Is my hon. Friend aware that this process of continuing to store Army uniforms and other uniforms only means that they deteriorate and eventually have to be sold at most unsatisfactory prices? Will he bear in mind that the general public like to see these uniforms, which could be arranged without any trouble? Will he please loosen up and have another look at this matter?

Mr. Amery: We will certainly look at it and see what we can do, but the position is that the stores are small and last longer if they are centrally held.

Home and Overseas Forces

Mr. Bellenger: asked the Secretary of State for War whether, in his forth coming Estimates, he will supplement the


information given in Command Paper No. 124 as to the size of our overseas garrisons and give a more detailed breakdown of home forces.

Mr. John Hare: The right hon. Gentleman will remember that, in answer to a Question by him on 12th February, I promised to attach a map to the Army Estimates Memorandum which will show the distribution of British and Colonial Forces in as much detail as requirements of security permit.

Mr. Bellenger: While I am grateful to the right hon. Gentleman for promising to do that, now that the Minister of Defence has given us the actual numbers —or the approximate numbers—in Germany and, I believe, one of our other garrisons abroad, will the Secretary of State go a little further and give us the figures on which this House can base its opinions and judgment when we discuss the Army Estimates?

Mr. Hare: I will certainly do all I can to help the right hon. Member. He has made the point very clear. I cannot go further than the interests of security dictate.

Recruiting

Mr. Sorensen: asked the Secretary of State for War what further improved amenities and other inducements he has considered introducing for the purpose of attracting and retaining recruits.

Mr. John Hare: As is explained in paragraph 53 of Command Paper 124, the Outline of Future Defence Policy, the problem of encouraging recruiting for the Services is receiving special attention. I have nothing to add at this moment.

Mr. Sorensen: Does not the right hon. Gentleman appreciate that in view of the fact that National Service is to end, approximately, in 1960 and, meanwhile, Regular recruitment is still far below what is desired, there is a desire on the part of the public to find out what other attractions the Minister has in mind to secure the necessary recruits?

Mr. Hare: I quite sympathise with what the hon. Member has in mind. I shall certainly see that as soon as possible those future attractions will be outlined.

Bermuda Garrison

Mr. Kershaw: asked the Secretary of State for War what proposals he has concerning the garrison at Bermuda.

Mr. John Hare: As the House is aware, all the Army's overseas commitments are being reviewed, and I regret that I am not yet in a position to make a statement about any particular garrison.

Mr. Kershaw: Before my right hon. Friend does make a statement about each particular garrison, will he consult the Secretary of State for the Colonies and realise that in these islands and in the West Indian islands—which are so close to the United States and far away from here—these garrisons are almost the only apparent influence this country has, because they can be seen and the British soldier, as always, is a very good ambassador?

Mr. Hare: I think the Secretary of State for the Colonies has heard that. I know he and the Minister of Defence will discuss the point which has been put forward by my hon. Friend.

Mr. Bellenger: Unless it is a matter of great security, can the right hon. Gentleman tell us the size of this garrison in Bermuda?

Mr. Hare: It is slightly more than one company strong.

Regular Commissions

Mr. Kershaw: asked the Secretary of State for War what proportion of men enlisted on Regular engagements of six years or more reach commissioned rank.

Mr. John Hare: The proportion of other ranks gaining commissions must obviously vary. I cannot therefore give a direct answer to my hon. Friend's Question, but it is our policy to provide every opportunity for suitable candidates. Last year, for example, 478 Regular soldiers were either granted commissions or admitted to the Royal Military Academy, Sandhurst.

Mr. Kershaw: Will my right hon. Friend bear in mind that the very long time which is necessary for men to spend in non-commissioned ranks is a disincentive to recruitment? Will he examine the possibility of other commissioned ranks on


the lines of present quartermasters being instituted in battalions—such as administrative officers or adjutants—which would give a further outlet to the men who have served for so long?

Mr. Hare: I am interested in considering any useful suggestions of the sort put forward by my hon. Friend. Perhaps he will be good enough to keep in touch with me and to outline his suggestions in greater detail.

Mr. Kershaw: asked the Secretary of State for War how many officers will be commissioned on Regular engagements during the calendar year 1957; and how many of these officers will be required, in due course, in the rank of lieutenant-colonel or above.

Mr. John Hare: About 500 Regular commissions are likely to be granted during 1957. Promotion to the rank of lieutenant-colonel does not normally occur until an officer has served for twenty years or more, and my hon. Friend will understand that I cannot forecast so far ahead.

Oral Answers to Questions — TRADE AND COMMERCE

Textiles (Trade Descriptions)

Mr. Hence: asked the President of the Board of Trade what steps he proposes taking, by legislation or otherwise, to protect the public against inferior quality textiles being sold as top quality.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll): Powers already exist under the Merchandise Marks Acts to prosecute traders who apply false or misleading trade descriptions to goods by wrongly attributing to them recognised standards of quality.

Mr. Bence: Is the hon. Gentleman aware that in this particular case the Board of Trade advised that the name of the manufacturer should be given but that unfortunately the retailer in Glasgow refused to give the name; therefore, the purchaser of the product seems to have no redress because he cannot get the name of the manufacturer?

Mr. Erroll: As the hon. Member is referring to a particular case, I should be glad if he would give me details so that I can look into it myself.

Copyright Act, 1956

Mr. Fletcher: asked the President of the Board of Trade when he intends to bring the provisions of the Copyright Act, 1956, into operation.

Mr. Erroll: I would refer the hon. Member to the Answer given to my hon. Friend the Member for Crosby (Mr. Page) on 21st February. My right hon. Friend is consulting interested organisations on the terms of the subordinate legislation which he will have to make before the Act can operate in the United Kingdom.

East Germany

Mr. de Freitas: asked the President of the Board of Trade whether he is aware that a number of our allies in the North Atlantic Treaty Organisation who have no official relations with the East German Government have semi-official trade or payments agreements with East German commercial agencies; and what steps he will take to encourage similar agreements to facilitate the exchange of goods between this country and East Germany.

The Minister of State, Board of Trade (Mr. Derek Walker-Smith): The agreements of which I am aware are unofficial; and the initiative for any similar agreement on our side rests with the representative trade organisations rather than with the Government.

Mr. de Freitas: Is it not the job of the Board of Trade to encourage our engineering exports and not to allow our commercial rivals, in Western Germany in particular, to get a great advantage over us in the trade they are doing now with East Germany and countries to the East?

Mr. Walker-Smith: If prospects of trade are encouraging, I think the hon. Member may expect those concerned in this country to take the initiative.

Mr. de Freitas: Is it not a fact that for the last few years the President of the Board of Trade has actually discouraged this trade? Will the right hon. and learned Gentleman now say that that policy has changed and that the policy of this country is to encourage this trade."

Mr. Walker-Smith: No, it is not a fact that the President of the Board of Trade has actively discouraged this trade.

Rhodesian Tobacco

Mr. Gordon Walker: asked the President of the Board of Trade whether the assurances he has received from United Kingdom tobacco manufacturers include an undertaking to increase the purchase of good quality Rhodesian leaf, if it is available, in each of the next three years.

Mr. Walker-Smith: My right hon. Friend has no reason to doubt, from the assurances he has received from the United Kingdom tobacco manufacturers, that it is their intention to increase the purchase of good quality Rhodesian leaf. if it is available, in each of the next three years.

Mr. Gordon Walker: Could we not have a clearer assurance than that? "No reason to doubt" is not really quite good enough. Could not the President of the Board of Trade satisfy himself that the answer to the Question would be in the affirmative?

Mr. Walker-Smith: No, Sir. The altitude of the tobacco manufacturers is based on the best information at present available to them, but it might not necessarily remain correct with the unfolding of the years.

Hire Purchase and Credit Sales

Mr. Vane: asked the President of the Board of Trade whether he is aware of the misleading price tickets frequently exhibited in shops specialising in hire-purchase and credit sale transactions, when the emphasis is placed on the low initial payment and the total cost and interest rates charged are ignored, or printed in smaller figures; and whether he will introduce legislation to make it obligatory that all advertisements and price tickets of goods for sale by installments show the price for cash and the interest rates charged where deferred payment is arranged, as well as the amount of the initial deposit, number and amount of later payments.

Mr. Enroll: The Advertisements (Hire Purchase) Bill which is now before the House deals with this subject.

Leipzig Trade Fair

Mr. Lewis: asked the President of the Board of Trade if he is aware that business worth nearly $1,000 million was

done by the German Democratic Republic at the Leipzig Trade Fair; that much of this trade was done with countries having no political or diplomatic relations with this Government; what amount of this trade was done by British industry; and what action he proposes to take to extend this trade.

Mr. Walker-Smith: I am aware of the Press reports of the business transacted at the Leipzig Fair. I have no means of gauging how much of this was done by British firms. As regards the last part of the Question, I would refer the hon. Member to the answer which my right hon. Friend gave him on 26th February.

Mr. Lewis: In support of my hon. Friend the Member for Lincoln (Mr. de Freitas), who asked a supplementary question on Question No. 20, will the right hon. and learned Gentleman now say what positive action he intends to take to assist British business men in doing trade with that country? Will he assist them in preventing West Germany from cornering the trade? Is he aware that some of our most reputable business firms sent representatives to Leipzig and are anxious to do business, but cannot get any assistance from his Department? Will he do something to help them?

Mr. Walker-Smith: If these business men want specific assistance from the Board of Trade in this context, I have no doubt that they will ask for it.

Offices, Scotland

Mr. Hector Hughes: asked the President of the Board of Trade if he is aware of the loss which will be inflicted on the international and other trade carried on by Scottish firms and business by the closing down of his Department's offices in Scotland; if, instead of closing these offices, he will consider transferring them to Aberdeen, which is easy of access to and by the whole north of Scotland; in the meantime, if he will make a detailed statement of his plans indicating how the functions of his Department's offices will, in future, be discharged; and how he will compensate Scottish firms and businesses by alternative services.

Mr. Erroll: The Board's Office for Scotland, which is in Glasgow, and the district office in Inverness will not be closed. My right hon. Friend is satisfied that the closure of the district offices in


Edinburgh and Dundee can be effected without harm to the services which the Board provide to Scottish industry; in particular, the services of the district office in Inverness will continue to be available for firms in the north of Scotland.

Mr. Hughes: Does not the hon. Gentleman realise that it is entirely wrong to make a change of this kind without consulting the local chambers of commerce and trades councils and other authorities which are very much aware of the relevant facts? Will he take steps to consult such bodies before making any further change?

Mr. Erroll: We are well aware of the services which our offices give, and we do not think that those services will be impaired by the economies that we have made.

China

Mr. Sorensen: asked the President of the Board of Trade if he will clarify the operation of exceptions procedure in respect of the licensing of exports to China in so far as it is not normally applicable to goods on the Soviet bloc lists or to goods on those lists before revision in 1954; and if a list of goods now affected by exceptions procedure has been published.

Mr. Walker-Smith: Goods which were on the Soviet bloc lists before October 1954, or are on those lists now, can only be licensed in the most exceptional circumstances, or where only minimum quantities are involved. For items which were never on the Soviet bloc lists exceptional licences are granted more freely. The answer to the second part of the Question is "No, Sir."

Mr. Soensen: Is the right hon. and learned Gentleman aware that there is a good deal of confusion about this matter? Would it not be expedient to circularise the information in order to make it clear that the obscure discrimination can be clarified by him?

Mr. Walker-Smith: No, Sir. As each case must be judged on its individual merits, there would not be much point in publishing a list of those items to which the exceptions procedure has been applied.

Industrial Disputes (Delayed Exports)

Mr. Sorensen: asked the President of the Board of Trade to what extent recent industrial disputes have suspended or delayed exports; and what is the estimated financial loss due to this.

Mr. Walker-Smith: Any interruption to production or increase in costs must make it harder to sell our exports, but it is not possible to quantify the effect of these events.

Mr. Sorensen: Is it impossible to get an approximate calculation of the loss due to this cause?

Mr. Walker-Smith: I do not think it is possible in the context of the disputes to which the hon. Gentleman refers. He will appreciate that the cycle of production in shipbuilding is an unusually long one, which would mitigate the effects, and the engineering strike was spread over varying areas with varying effects.

Norway

Mr. Hay man: asked the President of the Board of Trade whether he will make a statement on his Department's proposals for licensing a recent barter deal involving imports of sild from Norway in return for the sale of cars.

Mr. Walker-Smith: Sild may be imported from Norway under open general licence. No special authorisation from the Board of Trade is therefore required for the deal described by the hon. Member.

Mr. Hayman: Is the Minister aware of a recent article in the Grocers' Gazette under the heading:
' Cars for sild' swop could knock out home canning industry.
As the Cornish pilchard industry is already suffering from unbridled imports from various parts of the world, will the right hon. and learned Gentleman do something to protect such home industries?

Mr. Walker-Smith: I have not had the: pleasure of reading the issue of the: Grocers' Gazette to which the hon. Gentleman refers. We have no powers to interfere with what I think the hon. Gentleman agrees, whatever other views he may have about it, is a perfectly legal transaction.

Mr. Hayman: Will the right hon. and learned Gentleman bear in mind that the motor car industry is a highly protected one, whereas the home canning industries have no protection?

Mr. Walker-Smith: I will certainly bear those and all other relevant considerations in mind, but it does not alter the fact that we have no powers in this context.

Oral Answers to Questions — NATIONAL FINANCE

Economic Survey (Miscellaneous Services)

Mr. Osbome: asked the Chancellor of the Exchequer if he will give full details of the item £1,367 millions for "miscellaneous services" in Table 5, page 12, of the Economic Survey, since this is such a large proportion of the total consumers' expenditure.

The Economic Secretary to the Treasury (Mr. Nigel Birch): Details of items in "miscellaneous services" were published in "National Income Statistics: Sources and Methods" last year. Figures by eleven groups will be given in this year's National Income Blue Book. Of the £1,367 million in 1956, £162 million was on entertainments and £377 million on travel by public transport. The remaining £828 million covers a very large number of items.

Mr. Osborne: In the meantime, could my right hon. Friend say whether there is any significance in the fact that the one item of consumers' expenditure has risen by so small an amount in the last five years whereas in the case of every other item the rise has been considerable?

Mr. Birch: Such a large number of items are covered that it would be rather difficult to amplify my Answer.

Employers' Associations and Newspaper Advertisements

Mr. Lewis: asked the Chancellor of the Exchequer whether, under tax practice, payments made by employers to an employers' association are allowable for tax relief; and whether payments made by such associations for newspaper advertisements stating the employers' case in an industrial dispute also qualify for relief.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell): I am advised that payments by employers to employers' associations which are applied towards the cost of such advertisements, and the corresponding outlay by employers' associations, rank for tax purposes as admissible revenue expenditure.

Mr. Lewis: I observe that the "reds" are predominant today, judging by the buttonholes which are being worn. Does the hon. Gentleman's reply mean that, in effect, the day-to-day full-page advertisements in the national Press during the recent strike, which cost hundreds of thousands of pounds, were paid for by Her Majesty's Government in that the employers are allowed complete tax relief on them? Does it mean that, in fact, the taxpayers have paid for the advertisements?

Mr. Powell: No, Sir; that is not the result at all. These are trade expenses allowable like any other form of advertising.

Cost of Living and Wages

Mr. Lewis: asked the Chancellor of the Exchequer whether in his forthcoming Budget he will make proposals to the Trades Union Congress General Council requesting the Council's acceptance of a policy of wage restraint for the next financial year on a declared undertaking by the Government that they will guarantee not to take any action which will raise the cost of living; and further, whether he will take such action as will ensure a reduction in the cost of living during the financial year 1957–58.

Mr. Birch: No doubt the hon. Member will listen to my right hon. Friend's speech today with attention.

Mr. Lewis: If previous Budgets are anything to go on, the ideas and suggestions contained in the Question will not be followed. Can the right hon. Gentleman give a "Yes" or a "No" to the last part of the Question? Will the Government at long last take some positive action to implement their promise, made in 1951 and each year up to the present, to reduce the cost of living?

Mr. Birch: The hon. Gentleman must listen to my right hon. Friend's speech.

Dollar Expenditure

Mr. Vane: asked the Chancellor of the Exchequer how the dollar expenditure on oil during the twelve months ended 31st March, 1957, compared with the previous year.

Mr. Birch: Figures to the end of March are not yet available. About £50 million more was spent on oil in United States dollars in the twelve months up to the end of February than in the previous twelve months. This is a gross figure and represents only one of the ways in which oil purchases affect the balance of payments.

Mr. Vane: asked the Chancellor of the Exchequer which main items of dollar expenditure showed an appreciable increase and which an appreciable decrease during the financial year 1956–57.

Mr. Birch: I regret that figures for the financial years are not available. Figures for the calendar years 1955 and 1956 will be found in the White Paper on the Balance of Payments, Cmnd. 122, issued on 4th April.

Financial System

Mr. Grimond: asked the Chancellor of the Exchequer what further consideration he has given to the appointment of a committee or a Royal Commission to inquire into our financial system and economic machinery in general.

Mr. Birch: I would ask the hon. Member to await my right hon. Friend's Budget statement.

Mr. Grimond: In thanking the right hon. Gentleman, may I say that I accept that Answer, which I consider most encouraging? I have no doubt that the statement, which I take it he has announced will be made, will be extremely acceptable to all parties in the House.

Entertainments Duty (Cinemas and Theatres)

Mr. G. Jeger: asked the Chancellor of the Exchequer how many of the 200 cinemas and 13 theatres which were closed during the past year paid Entertainments Duty by direct payment; and what were the total amounts paid in each case during the year preceding their closure.

Mr. Powell: Entertainments Duty was being paid on the basis of certified weekly returns of attendances by about 160 of the cinemas and eleven of the theatres at the time of their closure. To extract the information asked for in the second part of the Question would involve undue expenditure of time and money.

Mr. Jeger: Can the Financial Secretary assure us that in a few minutes that information will be obsolete, out of date and irrelevant in any case?

Mr. Powell: The hon. Gentleman has only a short time now to be patient.

Occupation Forces, Germany and Austria (Currency)

Mr. Bellenger: asked the Chancellor of the Exchequer how much of the losses incurred as a result of speculation by occupation forces in Germany arid Austria after the war have been recovered from the German or Austrian Governments.

Mr. Powell: None, Sir.

Mr. Bellenger: Is it not the case that a Government Deparlment—if not the Treasury—held large stocks of Reich -marks as a result of these speculations, and that they were eventually converted into Deutschemarks at a favourable rate of exchange?

Mr. Powell: No sums have been recovered from either of the two Governments, but if the right hon. Gentleman will communicate with me, I will give him particulars of the actual financial transactions.

Capital Issues Committee

Mr. Braine: asked the Secretary to the Treasury how many requests for permission to issue capital have been received by the Capital Issues Committee for each year since 1945; how many of these applications have been granted; and what are the aggregate amounts of capital involved for each of the years in question.

Mr. Birch: I will, with permission, circulate the figures in the OFFICIAL REPORT.

Mr. Braine: I thank my right hon. Friend for that reply, but would he not agree that it would encourage much more


informed discussion in monetary policy if these figures and a breakdown of them were issued at regular intervals, say once a year?

Mr. Birch: I will certainly consider that. I think that it is a reasonable suggestion.
Following are the figures:




1
2
3
4


Calendar Year

Total Numbers of Applications
Applications granted




No.
£'000
No.
£'000


1945
…
1,116
471,161
938
465,752


1946
…
1,047
410,358
946
390,446


1947
…
1,365
664,906
1,203
624,473


1948
…
1,107
553,020
991
525,608


1949
…
1,126
558,479
1,042
527,021


1950
…
977
584,078
857
508,109


1951
…
1,271
662,457
1,177
554,129


1952
…
1,159
656,623
1,087
622,278


1953
…
1,396
649,398
1,346
637,209


1954
…
2,181
1,103,958
2,115
1,087,820


1955
…
2,075
1,088,885
2,002
1,056,184


1956
…
4,340
1,054,510
3,772
964,749


The number of requests for permission to issue capital received by the Capital Issues Committee for each year since 1945 is shown in Column 1. The amounts of capital respectively involved are shown in Column 2. Columns 3 and 4 show the numbers of applications granted and the amounts of capital respectively involved.

Oral Answers to Questions — LOCAL GOVERNMENT

Planning Appeals

Mr. G. Thomas: asked the Minister of Housing and Local Government the number of appeals against the decisions of local planning authorities that have been waiting for six months or over to be heard by his Department; and whether he will make a statement.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): On 29th March, out of 1,588 cases which had not yet been heard, seventy-five had been outstanding for over six months. Some of these had been held up at the request of the appellant, and others because he had not provided the necessary information.

Mr. Thomas: Is not the Minister aware that a good deal of annoyance and frustration is being caused by these long

delays; and that in at least one case, to which I have drawn his attention, there was a delay of eleven months between the hearing of the appeal and the notification of the result? Will he try to hurry up decisions in these cases?

Mr. Brooke: Yes, Sir. As I explained in answer to the hon. Gentleman's original Question, most of these long outstanding cases occur either because the appellant is not ready or because further information is required. But I am not satisfied with the position in the remaining cases, and I shall do what I can to speed things up.

London County Council (Housing Lists)

Mr. Collins: asked the Minister of Housing and Local Government if he is aware that 146.000 families are registered with the London County Council as requiring accommodation in two-, three-, or four-roomed dwellings, but that only 1,720 such dwellings will become available to the waiting list during the next three years; and what special steps he intends to take to make a much larger number of dwellings available for the many thousands of families living in distressing circumstances.

Mr. H. Brooke: I understand that the number of households registered with the London County Council whom it regards as in urgent need of re-housing is 53,000. Many thousands of dwellings will become available to the Council during the next three years; but priority for them will be given to families now living in slums and to others who will be displaced by redevelopment. This means that the Council expects to be able to do comparatively little for general needs; its difficulty is shortage of land. The eight new towns round London are, however, now building at the rate of 10,000 houses a year, and I believe that an increasing contribution will be forthcoming from schemes under the Town Development Act.

Mr. Collins: Is the Minister aware that the figure of 1,720 dwellings available to the waiting list in the next three years is the L.C.C.'s official figure? In view of what he said about the lack of sites, is he further aware that no new town has been started in the last six years of Conservative Government? Will he not


guarantee loan facilities to the L.C.C. so that it can get on with starting a new town and thus relieve these terribly distressing circumstances in which tens of thousands of London families live?

Mr. Brooke: The hon. Gentleman asked three supplementaries. I have here the leaflet from which he obtained the figure of 1,720, but he must not think that that is the total number of L.C.C. lettings. As I have explained, the great majority of dwellings will go to slum clearance cases and the like. The new towns around London are not yet up to anything like their full figure, and building is still going on—and at a high rate. The L.C.C. application to me for another new town is now under examination.

Caravan Sites

Mr. Remnant: asked the Minister of Housing and Local Government whether he has now concluded his consultations with local authorities and the caravan associations in regard to sites; and whether he will make a statement.

Mr. H. Brooke: My officers have held meetings with the local authority associations and the caravan organisations, and I am now considering the views put forward.

Mr. Remnant: Does my right hon. Friend appreciate that the position in relation to these caravan sites is at present in a chaotic state, and that so long as there is doubt about security of tenure no owner is likely to improve his servicing up to the appropriate limit? Will he consider also at the moment whether, where local authorities are not willing themselves to organise sites, they should indicate to applicants where they consider suitable sites exist in their area?

Mr. Brooke: I do appreciate that this is a difficult question, involving conflicting interests. The caravan organisations sent a deputation to my Department towards the end of last month, and I am now examining what they said.

Mr. Shurmer: Will the Minister do all he can to speed up these negotiations? Is he aware that in districts surrounding Birmingham—where the housing situation is very bad—people are being continually put on the side of the road, having nowhere else to go; that they are being prosecuted, and that the owners

of those sites have also been prosecuted? Where there are decent sites available, surely something could be done to help the housing situation—which the people are themselves trying to help by buying and living in decent caravans on sites around the great industrial areas. It is serious around Birmingham, and I hope that the right hon. Gentleman will do something very soon.

Mr. Brooke: These are not negotiations. The position is that representations, which are somewhat in conflict with one another, have been put to me by the local authority associations on the one hand, and, on the other, by the caravan organisations, and I am now considering them.

Mr. Shurmer: Hurry up.

Mr. Doughty: Does my right hon. Friend realise that people buying caravans very often buy them on the false statement that the vendor has a site available for them? Will he see to it that such practices are discouraged and that licensed sites do not have on them more caravans than the licence permits?

Oral Answers to Questions — NUCLEAR ENERGY (RADIATION HAZARDS)

Mr. Hastings: asked the Prime Minister whether, in view of the danger resulting from accidents, malicious or otherwise, in connection with the processes in which nuclear energy is applied, he will institute an inquiry as to the best first-aid treatment and arrange that such information is made available wherever it may be required.

The Prime Minister (Mr. Harold Macmillan): The Atomic Energy Authority takes the most exhaustive precautions against accidents and there are extensive measures for detecting radioactivity in all laboratories and plants where radioactive or toxic material is used. Emergency arrangements to deal with accidents which might occur are tested regularly in exercises designed to cover every foreseeable contingency. A draft code of regulations covering the protection of workers in factories against ionising radiations is in preparaton. A code of practice for the: protection of workers in hospitals in the National Health Service is also being


published. In view of these arrangements, I am satisfied that there is no need for the inquiry suggested by the hon. Member.

Mr. Hastings: As the results from heavy and even fatal doses of ionising radiation are not at once apparent, is it not especially important that in every area where such accidents could occur there should be a definite statement, easily read by all who may be affected, as to the danger involved and what should be done in the circumstances?

The Prime Minister: Yes, Sir. I quite appreciate the hon. Gentleman's anxiety about this matter, but I do think that the Authority is taking every possible precaution. In the laboratories and plants of the Authority, everything is done to ensure that high standards of protection against the absorption of radiation are general, and continuously observed. Personal records of radiation received during occupational exposure is kept for all persons whose work exposes them to such radiation.

Mr. H. Fraser: Would my right hon. Friend consider the report of the National Academy of Sciences in America, which states that within the foreseeable future the problem of the disposal of atomic waste from power plants will greatly overshadow the problem of the disposal of radioactive material from weapon tests? Would he, perhaps, push on with the idea, which was suggested in the Bermuda communiqué, of setting up some general nuclear control, at least between ourselves and the United States?

The Prime Minister: Yes, Sir, but, of course, the disposal of the waste is not one connected with the military uses of nuclear energy but is part of the inherent problem of its civil development; and one to which, of course, the Authority is giving considerable study.

Dr. Summerskill: In view of the fact that the greatest authorities in this matter agree that there are certain aspects which are obscure, would not the Prime Minister say that this is the time when an inquiry should be instituted? Could he say what are the objections to an inquiry?

The Prime Minister: I would certainly consider an inquiry if I thought it would help the work of the Authority carrying

on all this atomic development in its care of those employed upon it. But I am satisfied that at the present time everything possible is being done, and I do not think that an inquiry would help its work; it might even at present impede it. If, however, at any time I felt that some outside inquiry by experts not available to the Authority would be valuable, I would, of course, discuss it with the Authority and consider whether it would be useful.

Oral Answers to Questions — EURATOM

Mr. H. Hynd: asked the Prime Minister if it has yet been decided whether the United Kingdom will be a member or associate of the Euratom Treaty.

The Prime Minister: The United Kingdom is not party to the Euratom Treaty, which was signed on 25th March, but we have been engaged for some time in a programme of practical co-operation in atomic energy matters with the countries forming Euratom and with other Western European countries.

Mr. Hynd: Could the Prime Minister define a little more closely what kind of association this is? Is it similar, for example, to association with the Coal and Steel Community, or, if it is any other form, may we have it in a White Paper or in some other way so that we may understand exactly what the situation is?

The Prime Minister: These practical methods of co-operation are important. For instance, we have said that we would consider participating in a joint experimental reactor project on a reactor type which did not form a major part of our own development programme. We have said that we are ready to provide advice for the construction of a pilot processing plant for spent reactor fuels, in which, as the hon. Gentleman probably knows, certain Continental countries are particularly interested.
We have reached an agreement in O.E.E.C. on a standstill in regard to any restrictions in trade, and we are pressing ahead with the scheme for the removal of all restrictions in trade, tariffs, etc., in atomic machinery. We are operating a special agreement which the Atomic Energy Authority has with France and


the Netherlands, and Her Majesty's Government have also an agreement with the Governments of Belgium and Germany. If it would be of interest and value, I would certainly consider laying a Paper giving all the details of this practical cooperation which we are trying to achieve.

Mr. Gaitskell: Is the Prime Minister aware that it would, I am sure, be helpful to the whole House if such a White Paper could be issued? Further, can he tell us whether discussions are still going on as to the exact form of the association? For instance, are we to be represented at meetings of any bodies set up under the Euratom Treaty?

The Prime Minister: The Treaty was signed only on 25th March. We have rather concentrated on what I would call the practical field rather than the formal question of membership or association; but I will certainly consider the next step. We want to do all we can to help in this mutual work of co-operation.

Sir J. Hutchison: Would my right hon. Friend consider, with a view to promoting the European idea and keeping Britain in the lead in these atomic matters, whether it would be an advantage to this country to go into the Euratom organisation if only to the limited extent of the co-operation which he has already indicated this country is prepared to take?

The Prime Minister: My hon. Friend knows that we want to make all the practical co-operation we can. There are certain difficulties in actually becoming members of the body, difficulties which will, I think, immediately occur to my hon. Friend.

Oral Answers to Questions — HOUSE OF LORDS (REFORM)

Mr. Hamilton: asked the Prime Minister if he is yet in a position to announce the nature of the forthcoming legislation on the reform of the House of Lords.

Mr. Grimond: asked the Prime Minister if he will give further details of the Government's proposals for House of Lords reform.

The Prime Minister: No, Sir, not yet.

Mr. Hamilton: Is not this Answer the real reason for the resignation of Lord Salisbury, who evidently was more concerned with the preservation of the Cecils than the preservation of Cyprus— [Interruption.]

Mr. Speaker: I must ask the hon. Gentleman to remember the courtesy which is due from Members of this House to Members of another House.

Hon. Members: Withdraw.

Mr. Speaker: Order. Mr. Hamilton.

Mr. Hamilton: Would the right hon. Gentleman not agree that this promise, or threat—however one looks at it—:o reform the House of Lords has been in two or three Gracious Speeches, and will he—[Interruption.]—will he undertake to seek the agreement of the great majority on this side of the House by seeking to abolish the other place?

The Prime Minister: Considering how long a time the hon. Gentleman had to prepare his supplementary, I should have thought he could have done it in rather more courteous terms and within the rules of order. All I can say is that my noble Friend has a very distinguished record of service to this country, and when the Government's proposals are unfolded they will be shown to owe a great deal to hi? wisdom and counsel.

Mr. Grimond: Do I understand from the Prime Minister's last answer that it remains the policy of the Government to reform the House of Lords before the next General Election?

The Prime Minister: The hon. Gentle-man would do well to await the time when we unfold these proposals; I hope that, when they are unfolded, they will have his support. He will remember that this is an issue which brooks no delay.

Mr. Gaitskell: The Prime Minister, will, however, recall that in the Queen's Speech this Session it was definitely stated that the Government intended to produce proposals during the Session. [HON. MEMBERS: "NO."] Yes, it was. May I ask whether it is still their intention to do so?

The Prime Minister: The right hon. Gentleman would have asked his Question more correctly if he had taken the


precaution, for the sake of greater accuracy, to provide himself with a copy of the Gracious Speech.

Mr. H. Morrison: Are we to take it from the Prime Minister's reply that he has decided to ditch the undertaking to reform the House of Lords in the same way as his predecessor at No. 10 ditched the promise to reinstitute university representation?

The Prime Minister: I am afraid that all these niceties of ditchings are far beyond me.

Oral Answers to Questions — BALLISTIC MISSILES

Mr. Healey: asked the Prime Minister whether, under agreements now existing or under negotiation, the United States Government may operate from United Kingdom territory intermediate range ballistic missiles other than those transferred to the British Government under the Bermuda agreement.

The Prime Minister: The only agreement reached is that, in principle, certain guided missiles will be made available by the United States for use by British Forces.

Mr. Healey: Can the Prime Minister assure the House that nothing was said about the American Government being allowed to base its own guided missiles

in this country? Can he further assure the House that if no agreement was reached none will be reached unless the problems involved have been discussed in this House?

The Prime Minister: What we discussed, and what will be discussed further, I hope, in the defence debate, was the arrangements for the provision of missiles. As I said in the debate the other day, they are to be the property of Her Majesty's Government and to be manned by British troops, who will, of course, receive their prior training from American experts. I want to say that they would not be fired by any except British personnel, but the warhead would be in the control of the United States, and, to that extent, the United States Government would have a negative control.

Mr. Shinwell: Does the right hon. Gentleman's reply mean that these intercontinental ballistic missiles in the possession of the United States forces, if at any time in this country, would not be used unless with the full consent of Her Majesty's Government.

The Prime Minister: I tried to make that clear; and I went on to say that it is is absolutely untrue to say that the President and not the British Government will decide when the missiles will be launched and for what purpose.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

BUDGET PROPOSALS

3.31 p.m.

The Chancellor of the Exchequer (Mr. Peter Thomeycroft): I rise to introduce my Budget report and proposals.

REVIEW OF 1956–57

Budget speeches fall into a convenient and traditional pattern. It is customary to begin with a review of economic developments in the past year. I propose to do this and to start with the external position. With 50 million people living here upon a small island, and dependent on external trade and confidence in sterling, it is this which is always uppermost in the mind of any Chancellor. I will not weary the Committee with many figures. They are set out in detail in the Balance of Payments White Paper, published last week, and in the Economic Survey.

I would say, first, that, up to the middle of last year, the balance of payments was responding well to the measures introduced by my right hon. Friends the Leader of the House and the Prime Minister. The visible trade gap had been reduced and our invisible earnings were going up. As a result, the United Kingdom earned, in the first half of 1956, a surplus of about £150 million on our current transactions with the rest of the world. At the same time, our gold and dollar reserves rose by nearly £100 million, while other countries' holdings of sterling were reduced. Altogether, therefore, we seemed to be recovering fairly well from the difficulties which had arisen in 1955.

Now as to the second half of the year. The second half is normally more difficult for our balance of payments than the first; and this for a number of reasons. Our exports and shipping earnings tend to go down. We spend more on foreign travel. The annual payments fall due on our loans from Canada and the United States. At the same time, our friends in the rest of the sterling area are earning less from their sales of commodities. We must expect, therefore, some deterioration in our balance of pay-

ments during this period. Even in normal circumstances some loss of reserves is not unlikely.

To these seasonal factors must be added in 1956 the events in the Middle East. So far as I can judge, these events in fact affected our commercial position less than might have been expected. Shipping delays distorted the monthly figures for visible trade, but did not appear to affect their average. As recorded by balance of payments estimates, which, of course, deal with payments rather than arrivals, neither imports nor exports altered appreciably in value between the first half of the year and the second. In the invisible account, our net earnings on oil transactions were naturally reduced.

On the other hand, the interest payments on the North American loans were,. on this occasion, paid into a special capital account and so did not affect our current balance of payments. In the event, despite the seasonal deterioration and all the difficulties of the Middle East situation, we earned, in the second half of 1956, a surplus of £79 million. This compares with a deficit of £102 million in the second half of 1955.

But our problem was not, of course, on our current account. It was not concerned with the underlying strength of our position as a trader. It was a different problem, concerned with our function as banker for a large part of the world. This is, indeed, established by the detailed balance of payments figures which have since become available. These show that during the second half of the year, countries outside the sterling area reduced their holdings of sterling by £84 million, and that there were other large adverse capital movements. It was these factors which were responsible for most of the strain on our reserves.

The steps which my right hon. Friend the Prime Minister took are within the recollection of the Committee. We mobilised, with the help of the International Monetary Fund and of the United States, very large dollar reinforcements. We have brought into the reserves only one comparatively small part of them; that is the £200 million in dollars which we drew from the International Monetary Fund in December. Since then, in the first quarter of this year, the reserves have increased without any call being made upon our


International Monetary Fund standby or the Export-Import Bank line of credit.

This is, of course, a great improvement on the stormy events of the previous quarter, but, even so, our progress has not been all we would have wished. That, in brief, is the story of our external economy in 1956. During the year, we earned a current surplus of £233 million. This was much better than the deficit of about £80 million which we incurred in 1955. Nevertheless, by more exacting standards, we must judge it to be inadequate.

This improvement in the balance of payments was a result of policy decisions; that is to say, it was something which we not only set out to achieve but for which we were prepared to pay a price. We took—and we deliberately took— unpopular steps to get it. Put in the simplest terms, we kept the exports rising while we checked imports. The instruments we used were the credit squeeze, deliberately high levels of taxation, and controls on hire-purchase transactions. The price we paid was a check to the growth of total industrial production and of personal consumption. Few men would judge us to have been wrong in thus deliberately channelling our resources into investment and into exports.

The statistical story of these events is given in the Economic Survey. It is a story not of stagnation, but of immense variety. Although total production and consumption did not rise, there were wide alterations in the pattern of what we made and what we bought. For example, we bought fewer motor cars and household goods and, incidentally, saved imports of steel in the process. But we bought more food and more clothing, the latter to the great benefit of the textile industry. We built fewer houses, but more factories and offices. We built more ships and made more machine tools, but fewer consumer goods. All these tendencies were at work in different parts of the economy. It is a picture not of industrial apathy, but of a nation girding itself for renewed and greater effort.

The year 1956 was, then, a year of considerable activity, but, at the same time, of vitally needed redeployment. The inflationary pressure fell. The number of jobs and the number of men seeking jobs came more closely into

balance. A situation of acute labour shortage ended without losing the benefits—social as well as economic—of full employment. The criticism is made that 1956 saw a check in the growth of industrial output, and I want to face that criticism fairly and squarely. In 1955, production was high and the rate of production was growing. But in the process we were bringing imports into the country faster than we could earn the money to pay for them. There was the beginning of a situation similar to that which got out of control in 1951. We had to apply a check.

As my right hon. Friend the Prime Minister put it in his Budget speech last year:
 I think we have learned this lesson from the events of the past year. We cannot afford to run our economy flat out, with more jobs than men to fill them, more orders than industry can meet, easy profits at home and rising costs … There is really no future in importing extra materials that we cannot afford, in order to turn them into extra goods that we do not export …"—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 857.]
We intended to reduce the pressure, and we did reduce the pressure. We greatly improved the balance of the economy. In the process some potential production was lost, and that was inevitable. It is the difference between driving the machine flat out with the risk of breakdown and slowing it temporarily in order to resume a normal sustainable speed.

I would make this further point. While we deliberately used our industrial capacity less intensively in 1956 than in 1955, the capacity itself was growing. It was growing because investment was maintained at a high level. We were building the means to produce more and to produce it for export markets. The process of economic growth cannot be absolutely regular. There will be years of growth and years of consolidation. Our long-term growth will be all the sounder for the consolidation we undertook in 1956.

Now, as to costs and prices. What happens to them is crucial to our competitive position and, therefore, to our economic future. This is, indeed, a national rather than a party problem. In both technical and human terms it is the most difficult issue which this country has to face. My right hon. Friend spoke last year about a plateau; and, indeed,


retail prices rose only moderately since last April—an increase of about 2 per cent. Taken by itself this is not a bad record. At the worst, it was not more than a gentle slope. In the same period the index of wage rates rose by about the same amount. But since then there has been a settlement on the railways for about 5 per cent. and we all know that other discussions are going on. I do not intend to comment upon them, because that would be quite inappropriate in a Budget speech.

I want, however, to comment upon a rather longer view. The truth is—and everybody knows it—that we have all been trying to take more out of the economy than we put into it. Between us all, we have been forcing prices upward, with increases in incomes putting up the cost of living and the cost of living leading to demands for higher incomes. Between 1946 and 1956, incomes per unit of output increased by 50 per cent. In other words, we tried to get half as much again for doing the same amount of work. Is it any wonder that prices rose? Between 1955 and 1956 the nation's total output increased by £1,200 million in money value, but only by £240 million in real terms. We cannot take £1,200 million out and put £240 million in without doing a good deal of damage to our economy and to sterling in the process.

What can be done about it? Should we try to hold the spiral by subsidising the cost of living? Should we try to obscure the effect of rising costs by paying subsidies direct or indirect? This process, of course, requires that we should take back from the taxpayer what he is gaining in subsidised prices. As Sir Stafford Cripps found, it is a fantastically costly operation. It introduces a wide range of artificial factors into the economy. Unless it is accompanied by high taxation, it adds to the very inflation it is designed to obscure. When, at last, we find that we cannot afford it and have to modify the subsidies, this process of itself lends force to further wage and other income demands. It is not a policy which I could recommend.

What other courses are open to us? There are some who say that the answer lies in savage deflationary policies, resulting in high levels of unemployment. They say that we should depress demand

to a point at which employers cannot afford to pay and workers are in no position to ask for higher wages. If this be the only way in which to contain the wage/price spiral, it is indeed a sorry reflection upon our modern society. To slash production, to drive down investment, to push up unemployment to a level at which, despite high world demand, we have manufactured our own depression is, to say the least of it, a high price to pay for price stability. This does not mean that we must drift again into inflation, which puts profits so high and makes labour so scarce that dividends and wages are practically forced beyond our economic capabilities. It does mean that universal and permanent depression should not be regarded as a prerequisite to true stability.

But if we are not to rely upon the policies either of subsidy or of all-out deflation, then we must seek a degree of restraint and common sense and recognition of common interest far greater and far stronger than exists today. We must try, wherever we sit in this Committee and whatever part we play in (he economy, whether we come from the ranks of management or workers, to face the realities which now confront us. Many of our competitors, friendly nations with whom we are allied or associated, are practising more restraint, making greater efforts, showing a better realisation of world economic conditions, than we are.

This afternoon, I will content myself by saying this. We ought all to ask ourselves whether we have adjusted our outlook to the responsibilities as well as to the benefits of high levels of employment. A money income raised prematurely and beyond the real resources we possess is at best only a partial and ephemeral gain to the man who gets it and it is another blow to those who are living upon fixed incomes. We can earn only what we produce. Yet restrictions on production still exist on both sides of industry. In the difficult times which lie ahead, businesses must be ready to change their methods and their products, just as those who work in them must be not only ready but anxious to seek a fresh approach which is the only way that they can secure benefits that will not turn out to be illusory.

If we are to find a solution to this problem, we all have a part to play—and perhaps some sacrifice to make—management and workers and the spending Departments of Her Majesty's Government. I am sure that no one in this country wants to see our money steadily losing its value or sterling going the way of so many currencies in the past. If we are to find a solution to such problems as these, we must at least have the courage in Government, in management, and in the trades unions to state them bluntly and to be prepared to discuss them fully and frankly with one another. I make no party point of this. If, as a nation, we solve this problem—and we can only solve it together—there is no limit to the achievements which could be ours, under any Government. If we fail, there is no Government of any party that this country has to offer that can stand between us and a drab decline in all our fortunes. The Government have their role to play in grappling with inflation. I shall be discussing shortly the steps they have taken and intend to take. But no Government can solve the problem on their own.

So much for the economic events of 1956. It was a year in which, amid many economic difficulties, we did well, a year in which we laid sound foundations for 1957; but a year in which we still did not, as a nation, do well enough to prepare ourselves for the tasks that lie ahead.

EXCHEQUER OUT-TURN 1956–57

Let me now indicate briefly the Exchequer figures for the past year. Details of the Exchequer out-turn will, of course, be available in the White Paper later this afternoon.

REVENUE

First, as to revenue. Revenue last year was £5,158 million. £265 million more than in the preceding financial year, but £40 million below the estimate. Inland Revenue duties came to £2,705 million— £25 million above the estimate. Small increases in the yield from Income Tax and Surtax were partly offset by a reduction in receipts from Profits Tax.

Customs and Excise duties yielded £2,101 million. £57 million below the esti-

mate. The main factor in this was that receipts from Purchase Tax fell short of the estimate by £52 million, a reflection of the decreased demand for motor cars and other things. Tobacco receipts were £5 million below the estimate; on the other hand, receipts from beer and other alcoholic drinks—in spite of last summer's weather—were £7 million better than expected. Other miscellaneous items of revenue remained fairly close to the estimates.

EXPENDITURE

Now for expenditure. Total expenditure above the line was originally estimated at £4,738 million. It turned out to be £4,868 million, or £130 million higher. This increase was spread over all types of expenditure. The cost of the Consolidated Fund services was £824 million, which was £46 million above the estimate. One reason for this was that large numbers of National Savings Certificates were encashed last autumn and the interest which had accrued on them had to be paid out. I am glad to say that much of the capital and the interest has been reinvested in the new issue.

Defence expenditure exceeded the estimate of £1,499 million by £26 million, despite the economies of £45 million which my right hon. Friend the Prime Minister announced in June and October. This was partly due, of course, to the cost of operations at Suez, but partly, also, to higher pay and greater expenditure on research and development and other items.

Civil expenditure, at £2,519 million, was £58 million above the Budget estimate, again despite economies of £48 million. The main increases were £24 million for health and £21 million for education. These increases were due to a great extent to the effect of higher salaries, wages and prices. The cost of food and agricultural subsidies was £6 million above the Budget estimate. We spent £19 million more than the estimate on eggs as a result of the big increase in the supply of eggs in recent months, partially offset by savings on cereals and on the bread and milk subsidies.

To sum up the result above the line, there was a surplus of £290 million. This compared with an estimated surplus of


£460 million, which was to be increased during the year by £100 million as a result of savings on expenditure provided for in the original estimates.

BELOW THE LINE

Below the line, however, the position has turned out rather differently. Total payments below the line were £836 million, £185 million less than was estimated; receipts were only £3 million below the estimate. The deficit was thus only £621 million, compared with an estimated £803 million. The main contribution to this saving was a substantial decline in the provision of capital for local authorities. Against an estimate of £220 million for this purpose, issues have had to be made of only £109 million. These figures reflect the successful application of sound financial principles to the capital expenditure of the local authorities. The authorities attract savings by borrowing in the market as far as possible, and they now pay the market price for their capital, whether they raise it from the market or from the Exchequer. I shall press forward with this policy in the coming year. I realise that the market cannot meet all the requirements of the local authorities, but I shall continue to rely on the sound judgment of the Public Works Loan Board to prevent any un-necessary demand on the Exchequer.

Net Exchequer advances to the National Coal Board amounted to £26 million, £37 million below the estimate. This does not mean that the rate of investment in coal was reduced, but that the Board was able to finance rather more of its investment from its own resources. Last year's Finance Act provided that the Exchequer should supply the capital needs of the other nationalised industries for the two years ending 31st March. 1958. My right hon. Friend estimated that in 1956–57 issues of about £350 million might be required for this purpose. In the event, £284 million have been advanced under the Finance Act and £52 million under the new Transport (Railway Finances) Act, making a total of £336 million for this group of industries.

SUMMARY OF OUT-TURN

The out-turn can, therefore, be summed up as follows. Above the line there was a, surplus of £290 million. Below the line the deficit was £621 million. Thus, the overall Budget result,

which determined the amount of expenditure that had to be met by borrowing, was a deficit of £331 million.

NATIONAL SAVINGS

If I felt disappointment on learning that the fruits of the tax gatherers had not quite come up to expectations, it was offset by the knowledge that the National Savings Movement had had an exceptionally good year. In his Budget speech last year my right hon. Friend improved and enlarged the whole range of National Savings and made a challenge to the movement to which it has risen nobly. As a result, the total of National Savings now stands at £6,240 million, £116 million more than a year ago.

Both the Post Office Savings Bank and the Trustee Savings Banks did better than last year. But the major contributions to the net increase in savings were made by the new Savings Certificate and the Premium Savings Bond. Some people have been suggesting that the Premium Savings Bond is a failure. That is a curious way to describe a security which, even after the first rush had subsided, has continued to bring in several million pounds a month. Let us see, in any event, how these figures will look after the monthly prize drawings start in June.

I have said that the National Savings Movement did exceptionally well last year. It is quite clear that we shall need its invaluable help every bit as much in the coming year as we did in the past year. I am sure that we shall get it. The movement has more to offer than ever before and I feel confident that it will go on from strength to strength.

NATIONAL DEBT

The National Debt decreased by £34 million in total over the year. Reduction in the debt resulting from the return to the Exchequer of £450 million out of the sterling capital of the Exchange Equalisation Account and from the application of sinking funds of £42 million were largely offset by additional borrowings of £331 million to cover the balance of the below-the-line deficit and by an increase of £107 million arising from the issue of two securities during the year at a discount.

Eight hundred and twenty-four million pounds of 2½ per cent. National War Bonds matured on 15th August, 1956, and £658 million of this was converted into 4½ per cent. Conversion Stock, 1962, the rest being paid off. Further tranches of two existing securities were issued for cash during the year: £250 million of 3½ per cent. Treasury Stock 1979–81 issued at a price of 81 and £300 million of 3½ per cent. Funding Stock 1999–2004 issued at 80. Two hundred and two million pounds were lent back to the Exchequer by the International Monetary Fund, being the sterling equivalent of the dollars which we purchased from the Fund last December to reinforce our reserves.

In addition. Savings Certificates, Defence Bonds and Premium Savings Bonds brought in £100 million. The effect of the year's operations has been a reduction of almost £600 million in the level of Treasury bills outstanding. In other words, over the year the total of the National Debt was slightly reduced and there was a fairly substantial change from short-term to long-term borrowing.

EXCHEQUER PROSPECTS FOR 1957–58

Having reviewed the Exchequer outturn for 1956–57, I will go straight on to the Exchequer prospects for 1957–58. In some respects, they are encouraging.

REVENUE

On the basis of existing taxation, Inland Revenue duties at £2,876 million are expected to yield £171 million more in the coming year than last. From Income Tax we expect to collect £2,230 million—an increase of £116 million on last year. This increase is mainly due to the effect of increased wages and salaries. We also expect to get from Profits Tax an extra £60 million, mainly as a result of the increase in the rates made last year. Surtax, death duties, and stamp duties are estimated to produce about the same yield as last year.

The revenue from the Customs and Excise duties on the existing basis of taxation is estimated at £2,150 million this year compared with receipts of £2,101 million last year. None of the estimated

yields shows a substantial rise or fall on last year's figures. I expect £93 million from the motor vehicle duties, £2 million more than the receipts last year.

The estimate for non-tax revenue is £268 million compared with £261 million last year. Under this heading, I must admit to one receipt which is not really revenue at all but merely a book-keeping windfall. As the Committee knows, the interest of £37 million due last December on the United States and Canadian loans was paid into a special account and was included in the charge for interest on debt in 1956–57. Agreement has since been reached with the United States and Canadian Governments for the deferment of this interest payment. After, as I hope, the United States Congress ratifies this agreement, the interest will be returned to the Exchequer from the special account. I am bound to include this £37 million in my estimate of miscellaneous revenue. But I hasten to assure the Committee that I shall not regard this windfall as having any significance when I come to consider my Budget proposals. Altogether, then, revenue is estimated at £5,387 million, £229 million higher than last year's yield.

EXPENDITURE

I estimate total expenditure above the line in 1957–58 at £4,827 million, which is £41 million less than the actual outturn for last year. The Consolidated Fund services will require £757 million in the coming year—£21 million less than last year's estimate. This relief to the Budget results largely from the fall in the short-term interest rate. On the other hand, Supply expenditure is estimated at a total of £4,070 million, £26 million more than last year's out-turn. This increase is, of course, the net effect of the rise in civil expenditure—notably in the social services—and the reduction in defence expenditure.

If, therefore, existing taxation were to remain unchanged we should have total revenue estimated at £5,387 million against expenditure of £4,827 million, giving an estimated surplus above the line of £560 million. This compares with an actual surplus last year of £290 million.

BELOW THE LINE

I expect the net total of expenditure below the line to be a little less than the


actual total last year. I estimate the needs of local authorities' borrowing in the coming year as £100 million. The National Coal Board will need to make a larger call on the Exchequer in order to continue its investment programme, with net advances of £45 million, compared with £26 million last year. Issues to the other nationalised industries may amount to some £290 million, against which repayments of £14 million may be expected; and £50 million is likely to be required for the British Transport Commission under the Transport (Railway Finances) Act. The total net expenditure below the line is put at £587 million. Overall, therefore, remembering that on the existing basis of taxation we have an estimated surplus above the line of £560 million, the deficit—that is, the net expenditure we need to meet by borrowing—will be £27 million next year compared with £331 million in 1956–57.

These figures are much better than at one time I thought they would be. At any rate, they could be a good deal worse. I would emphasise that the improvement in the budgetary position which the figures indicate has not been achieved just by luck. They are the outcome of considerable efforts by my two predecessors and recently by myself, with the co-operation and support of our colleagues, to keep the level of Government expenditure under control.

The Defence White Paper sets out the effect upon expenditure this year of the review of defence policy which we have been conducting. After taking account of £63 million of German support costs and American aid we are providing £1,420 million for the defence programme. This is £79 million less than the original estimate and £105 million less than the actual expenditure of last year. On the civil side, we are providing for expenditure of £2,650 million—that is, £189 million above the Budget estimate of last year. This figure takes credit for the £20 million which we expect to save this year by the new National Health Service contribution, but also provides for an additional £10 million on account of the agricultural price guarantees.

During recent months we have clipped and cut expenditure over a wide field, but we still spend at a high level. There was a time when it was a principal preoccupation of Parliament to refuse

supply, or, at best, to grant it very grudgingly to the Executive. In recent times that trend has changed. Modern assemblies, urged on by their electors, tend, on the whole, to be far more pressing in their demands to spend money than to save it. After all the debates which have taken place, there must be very few forms of Government expenditure which do not have powerful advocates in one quarter or another.

The figures speak for themselves. Even after the changes we are making, the cost of the social services, at £1,677 million, will be £124 million more than the estimates of a year ago. Among them, education, at £445 million, will be £63 million more and the National Health Service, at £529 million, will be £28 million more. Exchequer grants to local revenues, at £105 million, will cost £21 million more.

If expenditure upon this scale is to be supportable, and, certainly, if there is to be any expansion of the social services, several things are necessary. The Government must be free to continue to study ways and means of reducing costs without impairing the essential services themselves. Parliament must recognise that checks and limits must be placed on the growth of even the most useful forms of spending. Indeed, public pressure for economy in all fields is the greatest help a Chancellor can have. The country as a whole must recognise that the surest way to provide against the need for further distasteful economies is to increase the total of the national product out of which these services have to be provided. Put simply, if we want to retain our social service State we must earn it by our own efforts.

NATIONAL LAND FUND

While we are still in the field of the Exchequer accounts, there is one change that I propose and should mention even at the risk of digressing from my main theme. In the Finance Act of 1946, the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) created the National Land Fund. The intention was that much greater use should be made of the power of the Inland Revenue to accept land in payment of Estate Duty.

The right hon. Gentleman's concept was, if I may say so, an imaginative one and we have developed it by taking power, in 1953 and 1956, to accept works


of art in settlement of Estate Duty. But the £50 million of securities with which the Fund began have by now grown, with accumulated interest, to a value at maturity of nearly £60 million. The Fund at present has an investment income of over £1,400,000 a year. Its average expenditure since its creation has been less than £200,000 a year. In other words, its capital and its resources are out of proportion to its likely expenditure.

In these circumstances, it is hardly surprising that the Public Accounts Committee has recommended that we should return part of this large and growing balance to the Exchequer. I am proposing to reduce the Fund's capital to £10 million by cancelling some of the securities held in it. This will for a number of years suffice to meet all demands on the Fund under present policies, which we mean to continue. This will, of course, have no effect upon the Budget figures.

ECONOMIC PROSPECTS FOR 1957–58

I have summarised the prospects for the coming year in the narrow budgetary sense. What can and should be done in the Budget depends not only on issues of Exchequer arithmetic, but also upon the economic outlook for the coming year. We enter here upon the realms of prophesy. The future can be discerned only in part—and then uncertainly—by statistical analysis. It depends upon many-other factors—the actions of employers and workers, the skill and energy with which we all set about our various tasks, and upon developments abroad as well as at home.

I want to look at the main categories of demand on our resources one by one. I have every confidence that we can look forward to an increase in exports. World trade is growing and our manufacturers have been making a strong effort to expand their markets abroad. Orders have been coming in at a high rate. There is a wider appreciation of the opportunities for our goods in the vast North American market. Whether we shall this year exceed or fall short of the increase of 6 per cent. in the volume of exports achieved last year I cannot tell. It will depend on our ability to deliver the right

goods at the right time at a competitive price. But I confidently hope for a substantial increase.

Certainly, the opportunity to export must be the first and most important answer to those who complain about stagnation. The condition of an expanding economy is, indeed, that we should sell more abroad. Increased production upon any other terms will merely increase our import bill. If we sell more abroad, we shall achieve not only our first objective, which is a larger trading surplus and an increase in our reserves, but our second, which is expansion at home on a safe and sound basis.

Next, consumption. Last year, there was virtually no increase in consumers' expenditure in real terms. Instead, there was a big increase in personal saving and repayment of debt. Part of this was a temporary adjustment due to the pressure on credit. Once people have paid their debts they not unnaturally tend to buy more. Indeed, the latest retail trade figures confirm this expectation. It seems likely, therefore, particularly in view of recent wage settlements, that there will be some increase in consumption this year. It would be a stony-hearted Economist who would altogether deplore this. The object of production is after all, consumption. But we must watch that we do not consume too much at the expense of other objectives vital to our economy.

This brings me to investment. Of course, we have to have a high investment economy. It is a condition of our survival. But people sometimes forget what a rapid increase there has been in investment. Since 1952, gross fixed investment has increased by 7 per cent. a year, compared with a growth of just over 3 per cent. a year in total national output. Thus, year by year, the proportion of our resources devoted to fixed investment has steadily increased. It was 12 per cent. of the gross national product in 1947, 14 per cent. in 1951 and 16 per cent. in 1956.

True, some countries do more than this, just as we must ourselves seek the opportunity to do more. Let us, however, not forget that circumstances in other countries are often quite different from our own. Some have rapidly growing populations to provide for. Some have smaller defence burdens. On the whole, we have


a good record in home investment. I wish that we had an equally good record of investment in our gold and dollar reserves.

At any rate, in the coming year, and, indeed, beyond, I see no sign of stagnation in investment. In the public sector the plans designed for atomic energy, for coal, for transport are large. The problem posed by investment plans for the basic and in part publicly-owned sector of the economy is not, in the main, whether we contemplate too little, but how we can manage to do so much. Yet we are right to do it. Ask any industrialist! Few would say that in this section we are guilty of being over-bold. We need more power, more steel, and more transport facilities. Investment such as this is, indeed, vital to the economy of our country.

As to the private sector itself, the rate of investment has mounted sharply in the last three years. Future plans vary. Some firms may wish to pause before making a further advance. But the pressure for capital on all sides certainly suggests to me that too hasty or too vigorous encouragement might well lead us to just that over-extension of the economy which we have been at pains to correct and avoid.

At this stage, investment is at a high level. If we can ensure that in both the basic and manufacturing sectors it is pushed quietly and steadily up over the years, if we can do it in a volume and at a pace within our material and monetary resources, we shall make a great contribution to our economy. But investment must be matched by savings. To spend too much too quickly, to watch inflation grow, to try to correct it by raising taxes and restricting credit—this is a sequence of events tempting to embark upon, but to be avoided at all costs.

To sum up the economic outlook, I foresee expansion in exports, some increase in consumption and probably a slight increase in fixed investment as well. Thus, there is a fair promise of renewed growth this year. It must be remembered that our first objective is the earning of a surplus on overseas current account substantially larger than that of recent years in order to build up the reserves, to repay borrowing, to finance overseas investment, and to provide for further drawings by the holders of sterling balances. We need this not only for our own security as a

trading nation, but also to honour our commitments as a world banker. We hold, after all, the reserves of many other countries within the Commonwealth and outside it and are the centre of the sterling system on which so much of world trade is based.

How, then, should we summarise the prospects? After making full allowance for the factors I have mentioned, I see some grounds for cheerfulness. As I see it, the temperature of the economy has been brought down to a more normal level by our disinflationary policies in the last 18 months. Resources appear to be at least adequate to the demand on them. It is reasonable to hope for further substantial export gains. All this seems to be a basis not for standing still, but for going forward. Expansion must be the theme, but we must do it at a pace and in a manner consistent with our large responsibilities as a trading and a banking nation.

MONETARY POLICY

Before I relate the economic prospects which I have outlined to my objectives in the present Budget, I want to refer to monetary policy. To influence the economy, Governments, of course, use fiscal measures. They put the taxes up or— as many are, no doubt, fervently hoping— they put them down. They use, too, in varying degrees direct controls. But they must also use monetary measures, since no Chancellor can ignore the powerful effect upon the economy of what men borrow and what men save.

In this task, both the banks and the Exchequer have their part to play. So far as the Exchequer is concerned, we must clearly continue with our efforts to influence the monetary system by the maintenance of a satisfactory Budget balance, by vigorous national savings, and by full use of market opportunities for funding.

The monetary measures available are really the following. First, Bank Rate and the rest of the interest rate structure; secondly, the measures connected with Exchequer financing and open market operations; thirdly, the specific controls over credit exercised through the Capital Issues Committee and the statutory restrictions on hire purchase. Continued use has been made of these


measures during the past year and we can claim that they have been by no means ineffective in checking inflation. The question which must be asked, however, is whether they have been of themselves enough. I think that the answer to that question must be, "No."

These measures would not have been as effective as they have been without the active co-operation of the banks in restricting credit. Given the practical limits to the monetary pressure that could be brought to bear on bank liquidity, it has been necessary for the Government to inform the bankers from time to time of the continuing need for credit restriction and to ask them to respond to the national need. My predecessor met representatives of the banking organisations last July, and, as was announced at the time, they undertook to meet the Chancellor's wishes and the national needs, which were that the contraction of credit should be vigorously pursued and that there should be no relaxation in their critical attitude towards applications for bank finance.

I think that the figures show that, despite some recent increases in advances, the banks have lived up to their undertaking. Over the year to 20th February, 1957, advances to customers other than the nationalised industries showed a net increase of £25 million on a total of £2,000 million. But the detailed figures reveal big increases in bank accommodation for just those industries which play the leading part in the export drive and provide the national economy with its basic services, offset on the other side by substantial reductions in the credit given for less essential purposes. Thus, in spite of rising costs and heavy demands, the banks have succeeded both in keeping the total volume of bank credit in check and in distributing it in accordance with national needs.

It seemed to me appropriate, before opening this Budget, to discuss the credit situation with representatives of the banking organisations and to indicate to them the directions in which I need their continued co-operation. They were forewarned when, on 7th February last, I said that the change in the Bank Rate was
… not a signal for bankers or others controlling sources of finance to relax credit or to ease restrictions on lending."—[OFFICIAL REPORT. 7th February, 1957; Vol. 564, c. 606.]

That statement holds good. The bankers cannot be expected to welcome such a statement implying, as it does, a continued restriction on their enterprise and competition. But they recognise it as an unpleasant necessity and I am glad to say that they have renewed their assurance that they will continue to maintain a restrictive attitude towards advances and will be particularly critical towards advances for the less essential purposes.

I recognise that some increase in the level of advances may result from the provision of bank finance for purposes of the highest priority, I am confident, however, that the banks will keep credit within bounds by their vigilance over the whole field and by strict control over lending for purposes that are not of first importance to the national economy. I cannot say for how long this effort will be necessary, but I intend to keep in close touch with the banks through the customary channels in order to meet their desire to respond promptly to the national needs.

I also intend to support the bankers' efforts by a change in the arrangements for the statutory control over borrowing exercised by the Treasury on the advice of the Capital Issues Committee. The banks are aware that, notwithstanding the statutory exemption of borrowings made in the ordinary course of business, bank advances should not in general be made for capital expenditure. Accordingly, it has been and will continue to be their practice to treat all applications from their customers for bank credit to finance investment in buildings, plant and other fixed capital as not being in the ordinary course of business and, therefore, as requiring Treasury consent under the Control of Borrowing Order.

In December, 1953, the Capital Issues Committee was asked to confine its attention to the purpose of such loans, leaving the terms to the discretion of the banks. I have decided to do away with that limitation and I propose to reinstate the previous practice by which the Committee also concerns itself with the need for bank finance and the period of such borrowing. I must emphasise that my reason for wishing to restrict bank finance for such purposes is not that an overdraft would be commercially unsound—the bankers, not the Treasury, must remain the judge of that—but


because of the danger that long-term investment financed from bank credit may add to the volume of investment without a corresponding increase in real savings.

That is why I have today written to Lord Kennet to ask the Capital Issues Committee that, in addition to examining the purposes of such borrowing, it should also consider whether bank overdraft is the appropriate method of finance. I have asked that it should not recommend consent, however good the purpose of the loan, unless it is satisfied either that there are exceptional features in the case which make it impossible for the applicant to raise the loan from non-banking sources, or that the proposed bank loan is a strictly temporary and short bridging operation, pending the completion of funding arrangements. My purpose in all this is to ensure that investment is matched as speedily and completely as possible by savings.

By this means I am hopeful that control over credit will be maintained. But the very fact that these arrangements have to be made is evidence that the monetary machine is working under great difficulties. I think that there is general agreement as to the objectives of monetary policy. This country stands determined to maintain a fixed and stable exchange rate. The primary requisite for this is that we shall be able and determined to avoid inflation at home. Equally, it is also agreed policy to avoid slumps and severe unemployment, if these perils should again confront us.

These objectives are not open to question. But there are the widest differences of opinion among those best qualified in this difficult field about how to attain them. These differences have little or nothing to do with political opinions. Examples of the various schools of thought are to be found right, left, and centre. We have in the Macmillan Report an authoritative exposition of the system as it worked before 1931. But the problem then was how to find a way to pump more credit into the system. That is not, to say the least, our main anxiety this afternoon. Moreover, much else has changed in this field since 1931. The problems of Exchequer finance, including the management of the vast debt so largely a legacy of war-time years, are altogether different in scale. There have

also been considerable changes in the structure of the banks' assets, making them less susceptible to monetary pressure.

Such changes in conditions have been widely recognised by critics both in this House and outside and for this reason suggestions for a committee of inquiry have been canvassed for the past year or more. My right hon. Friend considered them carefully last spring. He heard the views expressed to him by a small deputation led by my hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby). He considered at that time that an inquiry would be premature until we had more experience of the application of Bank Rate and of the credit squeeze.

In the last two months I have considered the matter afresh and have had the benefit of renewed interest which has been shown in it, in comment in this House, in a valuable debate a month ago in another place, in the Press, and in other quarters. I have now decided, after consultation with the Bank of England and with its full agreement, that the stage has been reached when an inquiry should prove useful and constructive. A committee will be set up with terms of reference:
 to inquire into the working of the monetary and credit system and to make recommendations ".

The inquiry will be primarily directed to reviewing the working of the system in the conditions of today, taking particularly into account the great influence now exerted upon it by the public finances and the need to maintain a high level of savings and investment. It will be concerned with the achievement of the best possible system of money and credit, while observing to the full the international obligations, in the matter of the exchange rate and in other matters, which Her Majesty's Government have assumed and have every determination to honour. I am glad to say that Lord Radcliffe has consented to serve as Chairman. The names of the other members will be announced as soon as the appointments have been made.

BUDGET OBJECTIVES

Having thus, as it were, both guarded my flank upon the credit front and set in hand a study of our future strategy in these matters, I can turn from monetary


policy to fiscal considerations and consider to what extent and in what directions I can properly reduce taxation, having regard to the state of the economy as a whole. The Committee will remember that I estimated that on the basis of existing taxation I should have a surplus above the line of £560 million, against an actual surplus last year of £290 million. The fact that our economic prospects cannot be assessed in advance with precision does not lessen my responsibility for exercising the best judgment I can in the light of the information and forecasts available to me.

In this part of my task, at least, I have not been lacking in advice. Words of caution from some and of encouragement—perhaps even more than encouragement—from others have been falling on my ears for weeks past. Let me say at once that I reject the extremes of both opinions which have been urged upon me. I reject unequivocally the view that the sole duty of a Chancellor is to remove txation at whatever risk to the economy and without regard to the consequent inflation that would certainly result.

That advice is the language of irresponsibility. Actions of that character might conceivably buy from the undiscerning a momentary popularity. It would be short lived. It would, indeed, be the easiest possible task for any Chancellor to boost home consumption and investment at the cost of lower exports, of higher imports and a thumping external deficit. It is, however, a policy in which I should be prepared myself to play no part whatever.

Nevertheless, I must fairly say that the other extreme of opinion contains elements of almost equal folly. I personally do not share the view of those who appear to consider that high rates of taxation will of themselves provide a sovereign remedy to all our ills. They are rather a reflection of an overstretched economy. The answer to an overstretched economy is not to tax it, but to relax it.

A satisfactory feature of the present Budget figures is the very great improvement in the overall Budget position compared with the out-turn for the past year. With a great deal of effort, and through restraint of expenditure, we have eased the problem of financing the public outlay. We have thus carved out some kind

of an opportunity now—not next year, but now—to make at least a modest start towards a reduction in the burden of taxation which presses so heavily upon the people of this country.

I cannot do much more today than to chart a pattern of progress, to place some directing arrows upon it, and to take one or two firm steps along their paths. These arrows point to what I believe to be our necessary and desirable goals. First, greater industrial efficiency and competitiveness. Our industries must be given greater opportunities to compete more successfully in world markets. Secondly, the provision of better incentives and opportunities for initiative and effort. Thirdly, the easing of the pressure of the tax system where this bears most hardly on individuals and families. In sum, I seek to create conditions in which our economic future, collective and personal, is seen by all to be worth striving for and worth saving.

I must emphasise once more that the general pattern of my Budget must be dictated by the need to place and keep our external position on a really sound footing. Therefore, the room for manoeuvre is limited. But, still, there is some room for manoeuvre, and we must try to use it wisely. I judge that, against the background of a Budget so nearly balanced overall, I can properly reduce the burden of taxation by a figure of about £100 million. This will leave us with a much bigger surplus than that realised last year, and an overall deficit that can be covered by real savings.

FISCAL PROPOSALS

Having set the stage, I will now—hon. Members may say "at long last"—come to my fiscal proposals. It may perhaps be convenient if I deal first with two important subjects on which I inherited from my right hon. Friend undertakings that changes would be seriously considered.

ENTERTAINMENTS DUTY

First, the Entertainments Duty. Hon. Members will recall that during the debates on the Finance Bill last year my right hon. Friend gave an assurance that he would, in the course of the year, undertake a comprehensive review of the whole structure of the duty. When I succeeded


him as Chancellor of the Exchequer I continued this work. I now have a number of proposals to make. This duty now brings in about £40 million a year. There can be no question of abandoning a yield of this order of magnitude. Entertainment is not in itself an unreasonable object of taxation and I must obviously continue to look to the patrons of entertainment for a substantial amount of revenue which I should otherwise have to collect in some different way.

On the other hand, there have been many changes since the duty was introduced in 1916 and, indeed, since it was last revised in 1954. Some forms of entertainment are expanding. As they expand they affect the profit of the other types. In particular, television has, in recent years, grown to be a powerful competitor with other entertainments and I have had to consider whether it is bearing a share of taxation comparable with its rivals. I have not overlooked the fact that anyone who buys a television set pays a substantial amount of Purchase Tax upon it. But there is no tax on its use comparable with the tax on the admission price to a cinema. I am satisfied that a fairer balance in the taxation of these competitive entertainments is desirable.

I accordingly propose that an Excise duty of £1 should be levied on each combined television and radio licence which at present costs £3. There will, of course, be appropriate rates for the comparatively few cases where television licences are issued at something different from the standard charge. This new duty will not, of course, apply to licences for sound reception only. The new duty will operate from 1st August and I estimate that it will yield £6¼ million in this financial year and £8 million in a full year.

Now as to the rest of the Entertainments Duty. This duty is at present charged under three scales. The highest scale applies to the cinemas, which in 1956–57 contributed about £34 million out of the total revenue of about £40 million a year from the whole duty. The lowest scale applies to theatres and other living stage entertainments, while sports are charged at intermediate rates. No one has pretended for some time that the present arrangements for the duty are logical or satisfactory.

A distinguished author, poet, and playwright, who, for many years, enlivened

our debates from a place on the front bench below the Gangway, has recently commented that, "You cannot remodel a mess". The Committee will not expect me to share—or at least not to express— such severe strictures. Nevertheless, amid the various claims of sentiment, tradition and economics, I would not say that it is easy to judge the right path to follow. After hearing a deal of evidence, and considering with great care all the arguments that have been advanced by the many interests concerned, I have come to the following conclusions.

First, I propose that the living theatre should be freed from duty altogether. The cost of this, including certain other entertainments at present charged under the first scale, will be £2¼ million in the full year. Secondly, I propose that all sports should be freed from duty altogether. This, with other entertainments charged under the second scale, will cost the revenue £3½ million. Thirdly. I propose that the cinemas should be relieved of duty to the extent of about £6½ million. I propose to achieve this by substituting a much simpler scale for the present complicated scheme. The new scale will be 50 per cent. of the amount by which the total admission price exceeds 11d.

The exemption in favour of indoor entertainments in rural areas will continue to be necessary to cover cinemas in such areas and I propose to widen its scope by raising the population limit from 2,000 to 3,000. In this way it will be possible to help a number of villages and rural areas which are within the purpose of the exemption but which are not, at present, within the letter.

These changes in Entertainments Duty will operate from 5th May and will cost £12¼ million in a full year or £11¼ million this year. The net cost, allowing for the extra revenue from the television duty, will be £4¼ million in a full year and £5 million this year. The resolutions will also provide for the revision in simpler terms, though to much the same effect as now, of a number of other statutory provisions relating to Entertainments Duty.

OVERSEAS TRADE CORPORATIONS

The second major commitment which I inherited was an undertaking to consider the taxation of United Kingdom


companies that carry on business overseas. As the Committee well know, such companies when they are controlled and managed in this country, have to pay tax at our very high rates on their profits earned abroad, subject to a set-off against the United Kingdom tax bill for similar taxes paid overseas. This position has been much criticised over many years on the ground that the United Kingdom concern trading in an overseas country where tax rates are lower than ours is at a disadvantage as compared with local competitors. It was fully reviewed by the Royal Commission, under Lord Radcliffe's chairmanship, which reported in 1955.

The Commission put forward a novel idea for dealing with the problem which I propose, in substance, to adopt. The idea is that our law should recognise as entitled to special tax treatment a class of overseas trade corporations. Broadly speaking, these will be United Kingdom companies controlled and managed from this country, but having all their actual trading operations abroad. Concerns that qualify as overseas trade corporations will be exempted from Income Tax and Profits Tax on their trading profits earned abroad. Of course, when they pay dividends or other distributions to shareholders out of those trading profits those dividends will be liable to United Kingdom Income Tax and if they are received by a United Kingdom company to profits tax as well. In appropriate cases there would, of course, be relief for taxes paid abroad.

The companies to be covered by my proposals will include those wholly engaged overseas in mining, oil winning, agriculture, manufacture and processing, public utilities and distribution. I do not propose to include shipping, since I am proposing to deal with the industry in a different way, which I shall shortly explain. Nor do I propose the inclusion of financial activities such as banking and insurance, since I do not think that they could properly be brought within the underlying conception of the scheme.

I must also give some precision to the proposed treatment of selling activities overseas. The Royal Commission contemplated that some overseas trade corporations would be the exporting side of United Kingdom manufacturing busi-

nesses, which would obtain merchandise from the United Kingdom and send it overseas for sale there. We must, however, be careful that this new relief has no possible suggestion of an export subsidy about it and the legislation will make it clear that to qualify as overseas trade corporations concerns dealing in United Kingdom goods must buy those goods "free on board" at a United Kingdom port at the price appropriate to a transaction between independent persons. Thus, only profits arising from that point onwards which can be seen to flow from selling activities outside this country will come within the exemption.

There doubtless are some concerns which already have all their trading operations outside this country and can qualify as overseas trade corporations immediately. But there are also many mixed businesses with their operations partly here and partly overseas. To secure the benefit of my proposals such concerns will have to "hive off" their overseas business into a separate company that fulfils the conditions for qualification as an overseas trade corporation.

These then are the outlines of my proposals on this matter. I am afraid that the legislation to put through a major reform of this kind will inevitably be long and complicated. I must ask the Committee to wait until the Finance Bill is published for details. As well as a close definition of this new class of corporation there will clearly have to be provisions defining distributions that are to be taxable, and the method of dealing with them, and possibly safeguards against abuse.

I commend these proposals to the Committee with confidence. I believe them to be a justifiable reform in our tax system and a legitimate help to companies that plough back their profits overseas in competition with those that operate under easier tax laws. Many of them operate in Commonwealth countries and in the Colonies. Under the impetus of this reform many more may well do so. As things stand at present a British company engaged in such overseas operations may be at a serious disadvantage compared with its competitors. We must seek to remove these disadvantages.

Moreover, under the existing law any such British company is a somewhat


tempting object for a take-over bid by foreign buyers, who can often base their offer upon a future tax position more favourable than would be open to any British bidder. Although the remission of the tax will represent an initial loss to the balance of payments, these proposals are a step towards more investment, more trade, and more exports. I am confident that this is a sound measure which will bring us increasing rewards in future years. The cost to the Revenue will not be negligible. I cannot, of course, give precise figures, but I estimate the cost at £25 million this year and something over £35 million next year.

PURCHASE TAX

I now turn to two further proposals in the field of indirection taxation. The first relates to Purchase Tax. It is designed to benefit the ordinary householder and, in particular, those families with low incomes who may fail to derive advantage from taxation relief in other fields. The concessions which I propose will be of help in the home and especially perhaps to those setting up house for the first time. I propose to reduce from 30 per cent. to 15 per cent.—that is, to halve— the rate of Purchase Tax on domestic kitchenware and tableware, whether of metal, pottery, glass or other materials, and also on cutlery and such furniture as is now liable at the 30 per cent. rate. I am also halving the present 30 per cent. rate on floor coverings—linoleum, carpets, and so on.

These changes will operate as from tomorrow; their cost will be about £18 million this year and about £24 million in a full year. 1 believe that this will not only be welcomed by consumers, but will be of help to a number of British industries affected. I am also taking the opportunity to apply the Provisional Collection of Taxes Act, 1913, to Purchase Tax. This will rectify a defect in the existing legal machinery for tax collection.

HYDRO-CARBON OIL DUTY

I am proposing to make one other change in indirect taxation. When the additional duty of Is. a gallon was imposed on petrol and certain other light oils last December, it was made clear that the extra duty was temporary. In fact, the Act lays down that it is to be removed not later than one month after

the end of rationing of all the products liable to the duty.

But we do not want to continue it any longer than we must. Although our oil supplies are not yet back to normal, they have improved sufficiently to justify the removal of the additional duty. I have, therefore, approved the issue of a Treasury Order, under which the duty will be restored to the former rate of 2s. 6d. a gallon for light oil and derv delivered from the refinery or bonded storage from 6 p.m. this evening.

I am in some difficulty in giving the Committee an estimate of the cost of this proposal. In the immediate future there will be a definite loss of revenue. On the other hand, as soon as rationing comes to an end—and we do not know when that will be—the yield of the duty will increase. It is impossible, therefore, to calculate the cost of the reduction of duty, but the least figure I can put on it is £10 million.

MINOR PROPOSALS

There are two minor proposals in the Customs and Excise field, which I should mention. I am proposing to continue the Customs duty of £4 a cwt. on imported hops which would otherwise expire on 15th August this year. I also propose to introduce a provision to simplify the administrative arrangements for levying duty on imported articles in respect of dutiable ingredients. This will relieve traders and the Department of a considerable burden of work.

While I am on miscellaneous and other points, I should mention that I shall be proposing in the Finance Bill to give statutory effect, so far as that is needed, to the new trade agreement with Australia which was signed in February.

I turn now to my proposals in the field of Inland Revenue. As always, there are several minor matters on which legislation is necessary, either to strengthen the tax code or to adapt it to current circumstances.

In the strengthening category I have two candidates. The first concerns the Estate Duty that is levied when a gift is made within five years before death. At present, the law gives rise to anomalies and lends itself to avoidance devices. One device, sometimes known as "the disappearing trick", takes advantage of the


fact that no duty is payable if the property given away—for example, a security due for early redemption—has ceased to exist before the death of the donor, even if he dies within five years of making the gift. I propose to put a stop to these devices and generally to rectify the anomalies that arise under the present law.

My second candidate concerns the investment allowance. Under the law as it stands there might, in certain circumstances, be a legal claim to two investment allowances for the same asset. This, clearly, should be stopped.

I shall also be including in the Finance Bill a number of relatively minor adaptations of the tax code, which can be more appropriately described and discussed at a later stage. Among them will be a provision for the temporary freezing of Schedule A liabilities in Scotland and Northern Ireland and another provision dealing with the person to be charged under Schedule A in cases where flats are let in consideration of capital premiums.

INVESTMENT ALLOWANCES

Turning to matters of wider interest I will deal, first, with the question of fiscal measures in the field of investment. As the Committee will remember, my right hon. Friend suspended the 20 per cent. investment allowances in February, 1956, in all but certain special cases. It will, I think, be clear to hon. Members who followed my earlier remarks about investment that I do not consider that the time has come to restore these allowances.

But there is one exception that I propose. Strong representations have been made to me in the case of the shipping industry. This industry is, indeed, in a special position. It is faced with severe competition in a world market, often from ships sailing under flags of convenience with small tax liabilities. It finds it increasingly difficult to build up finance for the replacement of its ships when they become obsolete. It has been suggested that I should give to shipping some specially favourable depreciation allowances which would enable the owners to build up, while a ship was operating, tax free reserves against its eventual replacement. Much as I appreciate the problems of the shipping industry, I cannot agree to do that.

I have, therefore, looked for alternatives. There are clearly very real difficulties in giving any special tax relief to a selected industry, for inevitably the question arises where to draw the line. There is, however, already in existence one form of special relief to the shipping industry, namely, the 20 per cent. investment allowance which it was allowed by my predecessor to retain last year. After careful thought I have reached the conclusion that as a recognition of its unique position I can increase that allowance.

I propose, therefore, that the investment allowance for capital expenditure on the construction of new ships shall be increased to 40 per cent. as regards expenditure becoming due and payable after today. This will cost nothing this year, but the cost will rise to £11½ million in a full year. I must repeat that this is a unique step for a unique industry which is the life line of our country and I must be rigid in my attitude to any requests by other industries for similar treatment. Capital expenditure on scientific research and approved fuel saving equipment, which at present qualities for the investment allowance, will continue to enjoy the present rate.

RELIEFS FOR AGE

I pass from shipping to the more human problems of personal taxation and, first, to taxation of old people with small incomes. Many people have for long held the view that our tax system is too hard upon elderly folk living on comparatively small incomes. Many old people do, of course, have relatively heavy calls upon their purses. On the other hand, we must not forget that very many younger people, with no greater income, have their responsibilities, too.

One has, therefore, to hold a fair balance between the old and the young. But I am sufficiently impressed by the case of the old to feel that I should take some action this year. I propose that there shall be two special income tax exemption limits for the old: an exemption limit of £250 for single persons over 65 and, secondly, of £400 for married couples where either husband or wife is over 65. In each case a marginal provision for incomes slightly over the limit will be necessary.

As a second step, I propose an improvement in the "age relief" arrangements.


The Committee may remember that people over 65 with a total income of not more than £600 have the whole income treated as earned income whatever its source. Thus, relatively small investment incomes from savings bear no more tax than pensions. I propose that the income limit for age relief shall be increased from £600 to £700. I hope that those two proposals, which will cost £21¼ million this year and £4¼ million in a full year, may do something to help the older members of the community.

CHILD ALLOWANCE

Next, I turn to tax relief for the parents of children. Bachelors are clearly better able to bear our present levels of taxation than married people. At least in a period when the amount of tax relief is necessarily limited, I believe that public opinion—including, perhaps, bachelors themselves, if they look towards the future —would favour a policy which concentrated somewhat upon the problems of the family. The Committee may remember that the Royal Commission gave special consideration to the tax position of married men with children.

At present, relief is given as a flat rate allowance of £100 for each child that qualifies. I have been examining the problem in the knowledge that children, particularly if they continue in full-time education, cost more as they grow older. This is true both for the parent who pays fees and for the many parents who, while not paying fees, make considerable sacrifices to keep a boy or girl at school or university who could otherwise have been contributing to the joint family income.

I propose, therefore, that the child allowance shall remain at £100 for children under 12; but that it shall be increased to £125 as from the year in which the child becomes 12 and that there shall be a further increase to £150 as from the year in which the child becomes 17. A child above the age of 16, as hon. Members may remember, ranks for allowance only if he or she is receiving full-time education or full-time training as an apprentice.

These increases, which are rather different from the proposals of the Royal Commission, will apply irrespective of the amount of the parent's income. The father of the boy or girl who has won a

scholarship to a grammar school or university will qualify as well as the father who chooses to educate his child at his own expense. I propose no change in the limit of child's income of £85 that disqualifies a parent from receiving a child allowance. The cost of these proposals is £14½ million this year and £ l7½ million in a full year.

PERSONAL ALLOWANCES FOR SURTAX

With this proposal for an improved Income Tax child allowance I associate another reform. This is in the field of Surtax and also stems from a recommendation of the Royal Commission. It, too, is based upon the proposition that the responsibilities of marriage can be costly. The Royal Commission recommended that the starting point for Surtax should vary as between single persons, married couples and married couples with children. They suggested reducing the starting point for the single person to £1,500, leaving the married couple to start at £2,000, and increasing the starting point of £2,000 by £160 for each qualifying child.

I do not propose to reduce the Surtax starting point—which is still where it was in 1920—for anybody, and I shall leave the single person at £2,000. I think, however, that there is a good case for some variation for the others. I propose, therefore, that the ordinary Income Tax personal allowances other than the single allowance—that is, the married allowance, the child allowance and the housekeeper and dependent relative allowance —shall run for Surtax as well as for Income Tax.

Thus, the Surtax starting point for a married couple will become £2,100. For couples with children it will, of course, in accordance with the proposal that I have just made on the child allowances, vary with the children's ages. For example, in a family with two children, one aged 10 and the other 14, the starting point for Surtax under the new arrangements will be £2,325. But that will apply as from 1957–58, the year now starting, the Surtax for which is payable on 1st January, 1959. I propose, however, that the change shall apply to the Surtax payable on 1st January, 1958, in respect of 1956–57. Since that year is already past, the child allowance to be taken into account will, of course, be the present flat


rate of £100. This change will cost £6 million this year and £9¾ million in a full year.

EARNED INCOME RELIEF

I turn now to the last of my proposals in the field of personal taxation. Our objective is opportunity and expansion. A tax system which offers the minimum inducement to those with the maximum responsibility is inconsistent with this aim. This criticism has particular force round about the £2,000 level of income. Yet this figure of £2,000 and upward represents the income range of the very men whose activities and decisions do most to determine our rate of economic expansion. In their hands rest, for good or ill, much of the future of the national economy. In penalising them, the nation penalises itself.

In few countries in the world is there less incentive to increased effort after the £2,000 figure has been passed. The fact that the earned income relief stops at £2,025 while Surtax at 2s. in the £ starts at £2,000 means that on every extra £ of earned income at, say, £1,900, 6s. 7d. is paid in tax, while on every extra £ of earned income at £2,025, 10s. 6d. goes in tax. And after that point the graduation continues to be very steep indeed.

Undoubtedly, the right way to tackle this is to apply to incomes above £2,000 the same kind of relief as that applied to incomes below £2,000. The Royal Commission proposed that the present earned income relief at two-ninths of the income should continue from £2,025 to £2,500, and that a smaller relief at one-ninth should be given for the band of income from £2,500 to £3,000.

I agree with the idea underlying the Royal Commission's proposal, but I am disposed to carry it a good deal further. There are salaries well above the £3,000 maximum suggested by the Royal Commission which, without any doubt, are wholly the reward, and the well deserved reward, of some of the work most vital to our country. If our theme is to be opportunity and incentive, I think that it is right that such income should be treated for tax purposes differently from investment incomes of the same amount.

I have accordingly decided to extend the two-ninths earned income allowance

from the present limit of £2,000 up to £4,000 and thereafter at one-ninth up to £10,000. The precise figures will, for technical reasons, vary a few pounds on either side of these levels. Even after these changes the effective rate of tax on total earned income for a single man will range from about a quarter at £2,000 to over a half at £10,000.

These proposals will at least ensure that of every extra £9 earned £2 will go into the pocket of the earner free of the ordinary incidence of Income Tax— though not of Surtax—up to £4,000 and £1 after that until £10,000 is reached. These changes will cost £17 million this year and £24½ million in a full year. A reform of this kind has been long overdue. We are determined that in the society which we seek to create there should always be room at the top. There must be rewards there, too.

The tax reliefs which I have proposed amount in total to £98 million in 1957–58 and to about £130 million in a full year. About a quarter of this total relief will take the form of assistance to our important trading operations overseas; about a quarter will take the form of additional incentives to those whose efforts are of particular importance to the expansion of the economy; about another quarter will give some measure of relief from the burden of indirect taxation and will thus help those outside the range of direct taxation. The remainder is designed to give some general easement of the tax burden, including something for the old but concentrating on those who are seeking to educate their children for the opportunities which lie ahead.

Having made these remissions of taxation, I am left with a surplus above the line of £462 million and an overall deficit of £125 million. On these figures, I think it will be agreed that the Budget is making a striking contribution towards the strengthening of our balance of payments and the stability of the economy. Even after the tax remissions which I have proposed, and allowing for the windfall from the interest on the dollar loans, the surplus above the line is nearly a third bigger than the actual surplus last year.

At the same time, the overall deficit is reduced to little more than half that of last year. I am satisfied that such a deficit will be amply covered by small


savings and other non-inflationary methods of finance. We have cut spending and reduced taxes. We must carve out even greater opportunities for the years which lie ahead.

CUSTOMS AND EXCISE

1. Entertainments duty (scope and amount of duty)

Motion made,

That the following provision shall be made about entertainments duty in respect of payments (whenever made) for admission to entertainments given after the 4th May, 1957: —

(1) Entertainments duty shall not be chargeable except in the case of entertainments which consist wholly or partly of a cinematograph show or a television show, and (subject to the following provisions of this Resolution) the duty in respect of any payment for admission shall be one half the amount (if any) by which the payment exceeds eleven pence.
(2) Entertainments duty shall not be chargeable in respect of an entertainment by reason of the inclusion in it of any cinematograph or television show which is merely ancillary to a lecture or exhibition or designed to give instruction or information relevant to the purposes of a lecture or exhibition.
(3) The entertainments duty chargeable in respect of any entertainment shall be reduced by one third if the Commissioners of Customs and Excise on an application made in such manner as they may direct are satisfied that—

(a) the entertainment consists partly of one or more cinematograph or television shows and partly of other items, but is all given in one auditorium; and
(b) not less than one quarter of the total time taken by the entertainment (excluding intervals) is taken by those other items.
(4) The entertainments duty chargeable in respect of any payment for admission shall be calculated by reference to the total amount of the payment, without excluding the amount of the duty.
(5) Subsection (4) of section one of the Finance (New Duties) Act, 1916 (which relates to the charge of duty on lump sum payments and other payments covering more than the admission to a single entertainment), shall have effect with the omission of the words "or covers admission to an entertainment during any period for which the duty has not been in operation" and the words "in respect of which entertainments duty is payable".
(6) In section seventeen of the Finance Act, 1948 (which provides relief for rural entertainments), for the words
 a population not exceeding two thousand" in subsection (1) there shall be substituted the words "a population not exceeding there thousand".

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. P. Thorneycroft.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).

Question agreed to.

The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. Entertainments duty (exemptions)

Motion made, and Question,
That any enactment conferring exemption from entertainments duty may be amended or repealed as regards entertainments given after 3rd August, 1957.—[Mr. P. Thorneycroft.]

put and agreed to.

3. New duty on television licences

Motion made, and Question,
That on television receiving licences issued after the beginning of August, 1957, there shall be charged a duty of one pound or, in the case of licences for longer than a year, of multiple licences, and of licences of special types, such larger duty as may be imposed by any Act giving effect to this Resolution.—[Mr. P. Thorneycroft.]

put and agreed to.

4. Hops, etc. and beer (customs)

Motion made, and Question,
That the following duties of customs, now chargeable for a period expiring on the fifteenth day of August, nineteen hundred and fifty-seven, shall be made permanent, namely:

(a) the duties now chargeable by virtue of section one of the Finance Act, 1953, on hops, hop oil and extracts, essences or other similar preparations made from hops; and
(b) the additional duty now chargeable in respect of beer by virtue of that section.— [Mr. P. Thorneycroft.]

put and agreed to.

5. Australian trade agreement

Motion made, and Question,
That with a view to the fulfilment of the agreement made on the twenty-sixth day of February, nineteen hundred and fifty-seven, between Her Majesty's Governments in the United Kingdom and in the Commonwealth of Australia (of which a copy was presented to Parliament on that day), the Ottawa Agreements Act, 1932, and any other enactment relating to customs which amends or relates to that Act, shall have effect as if that agreement were substituted for the agreement set out in Part II of the First Schedule to that Act.


And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. P. Thorneycroft.]

put and agreed to.

6. Composite goods (calculation of duties and drawbacks)

Motion made, and Question,
That further provision may be made as to the customs duties to be charged, and the customs and excise drawbacks to be allowed, on composite goods containing a dutiable part or ingredient and as to rebates and drawbacks of customs duties so charged.—[Mr. P. Thorneycroft.]

put and agreed to.

PURCHASE TAX

7. Purchase tax (household goods)

Motion made, and Question,

That, subject to any Treasury order under section twenty-one of the Finance Act, 1948. Part I of the Eighth Schedule to that Act shall be amended with effect from the 10th April, 1957, as follows: —

(a) a rate of tax of 15 per cent. shall be substituted for any rate of 30 per cent. In the following places, namely—
(i) Group 9 (which comprises floor coverings and rugs);
(ii) Group 11 (which comprises furniture, hardware, ironmongery, turnery, table-ware, kitchen-ware and toilet-ware of kinds used for domestic or office purposes);
(iii) paragraph (a) of Group 12 (which comprises appliances and apparatus of kinds used for domestic purposes, and not designed for operation by electricity or gas);
(iv) Group 13 (which comprises cutlery suitable for domestic or personal use, and spoons, forks and similar articles suitable for domestic use);

(b) at the end of Group 12 there shall be added a new paragraph—
(m) sewing machines not designed for operation by electricity … 30 per cent.
Except as provided by paragraph (b), this Resolution shall not authorise the said Schedule to be amended otherwise than by altering in one or more of the places mentioned in paragraph (a) the reference or references in that place to a rate of 30 per cent., but the reference or references may in any of those places be altered so that tax shall be chargeable at a less rate than 15 per cent., or shall not be chargeable under the Group or part of a Group in question.—[Mr. P. Thorneycroft.)

put and agreed to.

8. Purchase tax (provisional collection)

Motion made, and Question,
That the Provisional Collection of Taxes Act, 1913, shall apply to purchase tax — [Mr. P. Thorneycroft.]

put and agreed to.

INCOME TAX

9. Income tax (charge and rates for 1957–58)

Motion made, and Question,
That income tax for the year 1957–58 shall be charged at the standard rate of eight shillings and sixpence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess as Parliament may hereafter determine.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. P. Thorneycroft.]

put and agreed to.

10. Income tax (surtax rates for 1956–57)

Motion made, and Question,
That income tax for the year 1956–57 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1955–56.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913.—[Mr. P. Thorneycroft.]

put and agreed to.

11. Income tax (personal reliefs)

Motion made and Question,

That—

(a) in subsection (1) (earned income relief) of section two hundred and eleven of the Income Tax Act, 1952, as amended, for the reference to tax at the standard rate on two-ninths of the claimant's earned income or on £450, whichever is the less, there shall be substituted a reference to tax at the standard rate on—
(i) two-ninths of the amount (up to a maximum of £4,005) of the claimant's earned income; plus
(ii) one-ninth of the amount (up to a maximum of £5,940) of any excess of his earned income over £4,005;

(b) in subsections (2) and (3) (old age relief) of that section, for the references to £600 (which refer to the income limit for the full relief under subsection (2)) there shall be substituted references to £700;

(c) sections two hundred and twelve and two hundred and thirteen of that Act, as amended, shall have effect as if in sub-section (1) of section two hundred and twelve and in subsections (2) and (3) of section two hundred and thirteen the references to £100 were—
(i) in relation to a child over the age of eleven but not over the age of sixteen


at the commencement of the year of assessment, references to £125; and
(ii) in relation to a child then over the age of sixteen, references to £150;

(d) an individual, if at any time within the year of assessment either he or his wife living with him is of the age of sixty-five years or upwards.—
(i) shall be entitled to exemption from income tax, if his total income for that year does not exceed £250, or if he would be entitled to the higher (or married person's) relief under subsection (1) of section two hundred and ten of that Act and his total income for the year does not exceed £400; and
(ii) shall be entitled, if he is not exempt under the foregoing provision by reason only of his total income for the year exceeding £250 or £400, as the case may be, and the excess is less than £50, to have the income tax payable in respect of his total income reduced, where necessary, to an amount equal to half that excess;
but this Resolution shall not require any change to be made in the amounts deducted or repaid under section one hundred and fifty-seven (pay as you earn) of the Income Tax Act. 1952, before the twenty-second day of June, nineteen hundred and fifty-seven.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913.—[Mr. P. Thorneycroft.]

put and agreed to.

12. Income tax (overseas trade corporations)

Motion made, and Question,
That charges to income tax (including charges for past years of assessment) may be imposed by provisions the main purposes of which is to afford special treatment for companies operating overseas and companies with subsidiaries operating overseas.—[Mr. P. Thorneycroft.]

put and agreed to.

13. Income tax (persons chargeable under Schedule A)

Motion made, and Question,
That further provision as to the persons chargeable with tax under Schedule A and the manner of assessing and charging tax may be made for cases where part of a house or building is let separately.—[Mr. P. Thorneycroft.]

put and agreed to.

14. Income tax (valuations for Schedules A and B in Scotland and Northern Ireland)

Motion made, and Question,
That it is expedient to authorise such increased charges to tax as may, in particular cases, arise from amendments of the law

relating to the valuation of property in Scotland or Northern Ireland for purposes of income tax under Schedule A or Schedule B. being—
(a) as regards Scotland, amendments designed to give relief from tax by reference to owner's rates payable in the year 1956–57, and accordingly to value properties wholly or partly on the principles temporarily adopted for rating valuations under the Valuation and Rating (Scotland) Act, 1956; and
(b) as regards Northern Ireland, amendments designed to base assessments generally on the rating valuation for that year (with or without alterations for particular cases), instead of on the general revaluation for rating which came into force on 1st April last.—[Mr. P. Thorneycroft.]

put and agreed to.

15. Income tax (payments from House of Commons Members' Fund

Motion made, and Question,
That periodical payments granted out of the House of Commons Members' Fund (including periodical payments granted out of sums appropriated from that Fund or out of the income from those sums) shall be charged to income tax under Schedule E and shall be deemed for all the purposes of the Income Tax Acts to be emoluments assessable under that Schedule.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.—[Mr. P. Thorneycroft.]

put and agreed to.

16. Income tax (allowances for machinery)

Motion made, and Question,
That provision (including retrospective provision as respects past years of assessment) may be made so that, where a person incurs capital expenditure on the provision of machinery or plant without the machinery or plant belonging to him, then for the purposes of Chapter II of Part X of the Income Tax Act, 1952, as amended, that expenditure and in certain cases expenditure incurred by other persons on the machinery or plant shall be wholly or partly left out of account or allowances under that Chapter in respect of any such expenditure may be withheld or withdrawn.—[Mr. P. Thorneycroft.]

put and agreed to.

PROFITS TAX

17. Profits tax (miscellaneous charges)

Motion made, and Question,
That it is expedient to authorise all such charges to the profits tax (including charges for


past chargeable accounting periods) as may result—
(a) from amendments of the law relating to allowances, -deductions or charges for income tax purposes;
(b) from amendments of the enactments relating to the profits tax the main purpose of which is to afford special treatment for companies operating overseas and companies with subsidiaries operating overseas;
(c) from any provision that, in computing the profits of the South of Scotland Electricity Board for the purposes of the profits tax for any chargeable accounting period (including a past chargeable accounting period) no deduction shall be made for payments made by the Board by way of interest on any sum treated as a loan to the Board under subsection (3) of section seven of the Electricity Reorganisation (Scotland) Act. 1954, or by way of interest on any borrowings of the Board which directly or indirectly replace that sum or any part of it.—[Mr. P. Thorneycroft.]

put and agreed to.

ESTATE DUTY

18. Estate duty (gifts inter vivos)

Motion made, and Question,
That it is expedient to authorise all such charges to estate duty as may result—
(a) from amendments of the law relating to gifts inter vivos being amendments as to the property which is to be treated as comprised in the gift for the purpose of charging duty or as to the time at which any property so treated is to be valued, or as to matters arising out of any such amendments; or
(b) from similar amendments of the law relating to property deemed to pass on a death by virtue of a disposition or determination of a limited interest.—[Mr. P. Thorney-croft.]

put and agreed to.

19. Estate duty (retirement annuities, etc.)

Motion made, and Question,
That, notwithstanding any resulting charge to estate duty, provision may be made as to the treatment for purposes of estate duty of contracts and schemes approved under Part III of the Finance Act, 1956, and of annuities and other payments and rights under those contracts and schemes.—[Mr. P. Thorneycroft.]

put and agreed to.

GENERAL

20. Amendment of the law

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than

amendments making the same provision for chargeable goods of whatever description and amendments reducing any of the several rates of tax generally for all goods to which that rate applies (and for which the rate is not altered in pursuance of some other resolution of the Committee of Ways and Means).—[Mr. P. Thorneycroft.]

5.23 p.m.

Mr. James Griffiths: It is customary on these occasions that the first speech after the Chancellor has presented his Budget proposals is made by the Leader of the Opposition. My right hon. Friend hopes to participate in the debate at a later stage. He asked me to tell the Chancellor—I am sure the right hon. Gentleman will understand—that it is not out of lack of courtesy to him that he does not utter the words which the Leader of the Opposition usually utters on these occasions.
My right hon. Friend is today sporting a lovely scarlet carnation. That has no relevance to the Budget proposals but marks something upon which we all desire to congratulate him. Today is my right hon. Friend's birthday, and we wish him many happy returns.
I have noticed during the time that I have been privileged to serve as a Member of Parliament that great Parliamentary occasions like Budget day develop and gather their own traditions and customs. One of the customs is that this first speech shall be brief. As a trade unionist nurtured in the conviction that all customs ought to be retained until something better is found to take their place, I hope I shall not unduly strain that old custom.
The Chancellor has kept faith with one old tradition. He has brought along the old dispatch box which I am told is the one that Gladstone used. It is a link with the past, but I am not sure what Gladstone would say of the Budget proposals that it carries these days.
Since I first heard a Budget speech twenty-one years ago—I say this with due deference to all ex-Chancellors who are present—I have noticed that all Chancellors seek to clothe their Budgets in their favourite metaphors and also like to find some resounding peroration with which to end their speech. In retrospect, some of the metaphors and resounding perorations seem rather curious.
I particularly remember the first Budget speech which I heard in April, 1936, for it was at that time that I made my maiden speech. The Chancellor was the late Neville Chamberlain, and he used the titles of Dickens's novels as metaphors, and described his Budget as being from "Bleak House" to "Great Expectations." I think that all of us now, looking at subsequent events, would say that his metaphor was upside down. There are two ex-Chancellors present who were even more prone to such metaphors than is the present Chancellor.
We admire the confidence with which the present Chancellor approached his very great ordeal. We admire the vigour with which he sustained his fairly long statement, and we also admire the clarity with which he made it. He did not give us as many hostages to fortune as some of his predecessors have done in the metaphors which he used or in his peroration.
I notice that the Lord Privy Seal is present. He will recall—perhaps it came to his mind as he listened to his right hon. Friend—how in 1955 he gave hostages to fortune. When we came to the present Chancellor's proposals, perhaps the beginning of the right hon. Gentleman's 1955 Budget speech was in his mind, having regard to all the advice which has been tendered to the Chancellor recently. I remember the 1955 Budget speech. For greater accuracy, as the Prime Minister said earlier, I have refreshed my memory.
The Chancellor in 1955 began by saying:
This year the Budget comes at a particularly tantalising time, both from the political and the economic point of view."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 35.]
Indeed it did. It was before the General Election of 1955. The right hon. Gentleman ended with a peroration in which he said that in his Budget he was taking the country and the people of the country with him to the uplands of prosperity. Within six months the country was back in the moors, fens and boglands, and the right hon. Gentleman himself is not back from them even yet.
When the Prime Minister was Chancellor of the Exchequer the metaphor that he used was the "plateau". I sympathised with the present Chancellor when

he had to say something about the "plateau" of 1956. He let the Prime Minister down lightly. He described the "plateau" of 1956 as the "gentle slope." of 1957. There are millions of people in the country who do not think of it as a gentle slope, and I shall return to that point in a moment.
I do not propose to examine the Budget proposals in very great detail, but there are one or two to which I would refer briefly. First, I think that all of us—it was clear from the way in which the Chancellor's announcement was received by the Committee, and I think it will be similarly received by the country—wholeheartedly welcome on the whole what the Chancellor is doing about Entertainments Duty, in particular in relation to the live theatre.
The right hon. Gentleman is for the time being a Welsh Member of Parliament, occupying one of the few remaining seats where Tories can find an abiding place in Wales. Indeed, he knows perfectly well that in those places he and his hon. Friends hang on precariously. The Chancellor, like myself, will recently have had representations that the one remaining "live" theatre in Wales is being closed. In South Wales, therefore, there will be not a single living theatre. The nearest will be in Bristol, and that one continues precariously. Nevertheless, what he has said about the taxation of entertainment and sport will be given a fairly warm welcome.
Let me say a word about the Purchase Tax reductions—so far as they go. We shall examine them very carefully, but in so far as they bring some easement to the people's burdens they will be accepted. The principal sections among the people who feel those burdens most are the family men and the old people, the infirm, the afflicted, the aged.
So far as I understand it—and this is subject to closer examination, of course —I am glad that the instrument of the Budget is to be used to help parents in the education of their children. The children are our greatest assets, and we shall need them. I am, indeed, very proud to belong to a community which makes its own arrangements for providing opportunities for our youth, and I hope that the Chancellor will not make matters more difficult. I would tell him that what he proposes in his Budget to do


may very well be undone by what we fear he may do in changing the relationship of central to local government finance. That is the fear of all educationists, but in so far as the proposals do help parents they are all to the good, because we need all the gifts, all the talents, and all the knowledge of our children in the future. We must make sure that wherever a boy or a girl has gifts or talents which deserve to be fully developed and which we shall need, we shall do all we can to help to develop them.
The right hon. Gentleman made reference to proposals in regard to companies which invest overseas, and I should like to say a word or two about the Commonwealth countries and Colonies. All of us who go to the Commonwealth countries and Colonies, particularly those that are on the threshold of democratic independence, are becoming increasingly worried by the fact that those places are looking all the time, and increasingly, outside this country for the capital that they need for their development. I do not like it.
I was in the West Indies, and I know that it was a tragic mistake to sell, as we did, our Trinidad oil interests. By doing so, we disposed of one of the greatest assets that the West Indies had. Everywhere one finds penetration by other countries. There is, for example, the report which has been made by Vice-President Nixon following his visit to Africa. I hope that when we examine the proposal it will prove to be something that can be of help in developing the Commonwealth countries and Colonies.
I have read that in these days the terms of trade are turning in our favour, that imports will be cheaper and that we should rejoice because of it. I hope that we shall temper our rejoicing. Indeed, one of the concerns of those who are interested in this subject is the way in which, in the last two years, the prices of primary products and raw materials have been falling. When we consider this matter later, I will urge upon the whole Committee that this is a cheapness for which we may pay a very heavy price.
In Ghana, where the independence festivities have just concluded, the price of cocoa—their life blood—has halved in the last two years; and they are now eating into their stabilisation fund, which is the

basis of their future development. It would be of no use—or at least of much less use—our producing some budgetary relief in the form now proposed—or in any form in which it will finally emerge— if, at the same time, these Colonies find themselves in poverty because of the fall in the prices of their primary products.
The important matter nationally is the winning of a new place in the world. The 50 million people of whom the Chancellor spoke are dependent for half of their food on the outside world. We need leadership, but we have to lead—not bully our way into that position. We have all these problems to face in this mid-twentieth century, and in the end the battle for a new place in the world, and the battle to sustain and expand our economy, will be won in the fields, the factories, the mines and the workshops. How does this Budget look to those people working in them? I say quite frankly to the Chancellor that my first impression is that his Budget will immensely disappoint millions of our people.
The right hon. Gentleman has provided for a section but, after all, a fairly small section of our more than 4 million old people. None of us grudge that. He provides them with some relief in taxation. But what about the others? One in four of our old-age pensioners depends on National Assistance. What a miserable, bare life. Here we are, with £100 million and more to give, but the poorest in the land get nothing out of it at all—nothing whatever. There is nothing for the poor, nothing for the sick, nothing for the maimed—and, apart from a little off Purchase Tax, precious little for the millions of others who do not earn enough to get Income Tax relief.
Therefore, I would say to the Chancellor that whatever cheers he has had from his side of the Committee, whatever cheers he may get from those other people who will regard this Budget as being what they have been shouting for—a middle-class Budget—he will get few cheers from the rest.
I want to see skill and knowledge rewarded, but I want to see it rewarded at the expense of idleness, not at the expense of the poor. I want concessions made to provide an opportunity for those who bring to their country their knowledge, skill and experience in industry, in the professions and in administration, but I


want them provided at the expense of those who derive so much wealth from the country and give so little service to it—[HON. MEMBERS: "Who are they?"] Who are they? Indeed, they are there— [HON. MEMBERS: "Who are they?"] There are plenty of them, but I will not deal with that matter now. We can discuss it again.
There must be opportunity with some degree of equality to it, and there is no real equality here. This is not distributing wealth in favour of the poorest; that is quite clear.

Mr. Cyril Osborne: What equality does the right hon. Gentleman propose? And at what figure does he want to start it and limit it?

Mr. Griffiths: Thank goodness, we have much more equality now than when I started life in the pits as a boy of 13, and it is a better country for it. If we are to get the men and women upon whom this battle for a bright future depends, they must be given the opportunity. They get very little opportunity from the Budget.
I say to the Chancellor that there will be great disappointment. The country has today been distributing its favours and its surpluses, and providing reliefs but, apart from a few things—almost a few farthings in the collection—for the poorest and for those in receipt of low incomes there is nothing at all. This is not a Budget that will help to win the battle of Britain. We shall have to wait for another Government and another Chancellor to produce such a Budget.

5.39 p.m.

Mr. Eric Johnson: Sir Gordon, it has been my privilege to catch the eye of your predecessors in the Chair in time to congratulate, I think, three successive Chancellors on their Budget speeches. I should like to congratulate my right hon. Friend also, and need only say that his speech was made with the vigour and the clarity which we have come to expect from him, and that the lucidity of his exposition came up to the high standard set by his predecessors.
It is difficult immediately to absorb and evaluate all that my right hon. Friend has said. I expect that all of us during the past few weeks have been coming to various opinions about what we thought

my right hon. Friend would include in his Budget, what we hoped he might include, and perhaps what we thought he ought to include, even if we did not really expect him to share our views.
Very high in our list of expectations would come what he has said about the reduction in Entertainments Duty in respect of cinemas. I welcome it very much, and I am sure that we are all glad to know that he has been able to go a step further and abolish the tax altogether in respect of the live theatre and sport. I assume that the abolition will cover all sports which have hitherto had to pay Entertainments Duty.
I should like to make a suggestion to my right hon. Friend as to how he might recoup some of what he has lost in revenue in giving up Entertainments Duty, quite apart from what he may get from the licence on television sets. I should like briefly to refer again to the proposal for a tax on betting. The Committee will recollect that we had a debate last year on a Motion moved by the hon. Member for West Ham, North (Mr. Lewis) on this subject of a betting tax. On that occasion, the Government gave an undertaking that such a tax would be introduced as soon as Parliamentary time permitted. I asked my right hon. Friend the Home Secretary a question about it only a few days ago, and his reply was that time did not yet permit.
I do not want to weary the Committee with statistics on betting; they have been given a number of times already. Briefly, the position is that, leaving the totalisator out of account altogether, there is £50 million a year staked at dog tracks with bookmakers who contribute about £1½ million in bookmakers' duty. For horse racing, the figure staked is about the same, some £50 million, but no duty and no direct contribution to the Exchequer is paid. By contrast, there is a large amount about £160 million at a rough guess, staked with the off-course starting price bookmakers, who make no contribution other than the Income Tax which they pay, presumably, on their profits; nor do they make any contribution to the sport which provides them with their living.
The football pools, on the other hand, provide a very different picture. About £21½ million a year goes to the Exchequer, out of about £70 million a year staked on the football pools. There


is here a very marked contrast with about £1½ million out of about £260 million staked annually with bookmakers.
It seems to me that there is ample scope for my right hon. Friend to recover what he has given to horse racing and dog racing, which, in the last nine months of 1956, paid £920,000 and £540,000 respectively in Entertainments Duty.

Mr. Marcus Lipton: The hon. Gentleman overlooks just one point. There is a considerable sum of money collected from street bookmakers who are prosecuted from time to time.

Mr. Johnson: I am at the moment concerned with the proposals of my right hon. Friend the Chancellor of the Exchequer rather than with matters falling within the province of my right hon. Friend the Home Secretary. I do not know what the contribution made in that way amounts to, but I imagine that it is a very small proportion.
I would suggest that the system of betting should continue as it is now, subject to a few modifications. First, there should be a tax on cash betting off the course, which should be legalised—as was accepted after the debate last year—and under the control of the Betting Control Board or its agents. Secondly, any profit-making organisation which offered facilities for all betting on the course and credit betting off the course on horse, or dog racing should be licensed and registered. This procedure would replace the present tax on the dog track bookmaker. The registration should entail an annual, flat-rate fee irrespective of the size of the firm, and, in addition, there should be a levy of so much for every employee of the firm.
Such a provision would have a quite a wide scope. Nearly everyone in the country, I believe, would agree that it would be right for the sport on which these bets are laid to derive some benefit through some form of contribution arranged as best it could with the Exchequer, and that the Exchequer, also, should benefit by this very large sum.
It did not altogether surprise me—I would put it among the things for which we certainly hoped—that my right hon. Friend has abolished the extra 1s. duty on petrol. Judging from the number of cars on the roads in the past few weeks, it will not be long before he recovers the

small amount which the Revenue has so far lost owing to petrol rationing. I would only hope that the oil companies, the taxi-cab proprietors and, more especially, the private car hire proprietors, will follow the very good example set them by my right hon. Friend this afternoon.

Mr. Lipton: The oil companies will not; we know that.

Mr. Johnson: A consideration of petrol duty brings me to the subject of roads. It is really not much good having more petrol if the roads are to remain in their present condition. In the Economic Survey, 1957, it is said that
 Investment in the basic services of fuel, power and transport, including new road building, is expected to increase.
Investment in road building will have to increase a very great deal if it is to be of much practical use. It has been most astonishing in the post-war period that no Government, irrespective of party, have faced this problem or made a serious attempt to do anything about our overcrowded and antiquated roads. This is all the more remarkable when we think what other European countries, which suffered more than we did during the war, have been able to do.
In Germany last year, 175 miles of autobahn were completed and about 1,300 miles were already under construction or planned. In Holland, 137 miles were completed, 140 miles were under construction, and 600 were planned. In this country, twelve years after the war is over, all we find is that a start has been made on one miserable little motor road, eight miles long, which it will take two years to complete.
The speed of road construction is not a matter for my right hon. Friend the Chancellor except in so far as it may be slowed down by lack of money or the economy is damaged as a result of so little progress being made. But if the mechanical side of road building is not his concern, the financial side most certainly is. We have often been told that we cannot afford these expensive road building schemes in this country, despite the fact that—I think I am right in saying—the average amount spent on the roads per vehicle per year was £19 in 1938 and is only £17 now, although the materials now cost a lot more.
We all know perfectly well that this is a very expensive business. I am told that the cost of building a mile of motorway is about £300,000 and that it takes about 450 tons of steel to do it. For all that, I should like to suggest that it is not a very bad investment to put £300,000 into building a mile of motorway when it is estimated that the annual saving in vehicle operating costs from a mile of motorway would be £40,000. That is about 13 per cent. on the amount invested.

Mr. E. Fernyhough: I represent a constituency which is interested in shipbuilding and ship repairing. Since the end of the war, these industries have constantly been short of steel. Will the hon. Member tell me whether he would take steel away from the shipyards, which are short of steel for building ships for the export trade, and devote it to the roads?

Mr. Johnson: I quite appreciate the hon. Gentleman's point, and it is possibly one of the reasons why the road programme has been slowed down. It is equally desirable to have adequate roads on which to transport the cargoes which these ships might take away, but it is not much good building ships if the cargoes they are to contain are too expensive. I realise that this is a valid point, and I only drew attention to it in a general sort of way.
Other countries have these problems as well, and they have tackled them. France and the United States have both introduced special financial legislation to deal with their road building problem, and a great many other countries regularly devote either part or the whole of what they receive from road users' tax revenue to building roads. A suggestion which has been put forward, and which I myself have put forward tentatively more than once, about a road loan to help us to build roads, had a very chilly reception, but I hope that my right hon. Friend will think again about it.
I would again refer to the Economic Survey, in which the last paragraph but one states:
 Our prospects, therefore, depend mainly on our success in the expansion of exports.
I believe that our exporting industries are being unduly handicapped by the

hopelessly inadequate state of our road system.
I have one more topic which I wish to bring to the attention of the Committee. In the Budget debate last year, I expressed the view that neither management nor organised labour in industry was doing as much as it ought to do to keep down prices. I said that on the one side —and I still believe it to be true today— there is far too much anxiety to pass increased costs on to the consumer, and that, on the other, there still appears to be a failure to realise that increased wages without increased production do not do anyone very much good.
What is quite certain is that the people who suffer by the perpetual state of wages and prices chasing each other are these to whom reference has been made this afternoon; that is, those who are trying to live on small fixed incomes. My right hon. Friend showed that he is aware of that problem, and has indeed put forward certain proposals to help, and these I welcome very much.
I did wonder whether my right hon. Friend could not have gone a little bit further to help the old people who are really very badly off. All hon. Members of the Committee are aware that for some time old-age pensioners' associations have been pressing their Members of Parliament to do something to try to get them an increase of £1 in the retirement pension, which would bring it to £3 per week for a single person. I apologise for quoting figures again, but to do that would mean an extra £220 million on the cost of pensions right away.
That would be in addition to the present £450 million which they cost, so that the people who are talking in terms of a small amount of £100 million now are really not being very realistic. The cost of raising the retirement pension to £3 now would amount to a charge of 1s. 6d. on the standard rate of Income Tax, or of 4s. on the National Insurance contributions, and, of course, in twenty-five years, it will be very much higher. Pensions of £3 per week would cost £1,200 million a year.
I expect that a great many hon. Members read the interesting and, I thought, excellent article in the Economist of 2nd March on the subject of pensions. It drew attention to the fact that there were three


different problems to be faced, and that they could not possibly be tackled by following the same line of action; that is, a flat increase in the insurance benefit. The article went on to say:
 This is impossible. It is arithmetic, not black reaction, which stands in the way.
When we think of these figures, I think we must admit, if we are honest with ourselves, that that statement is perfectly true, and that a flat increase in the pension is not the solution of the problem.
I wish sometimes, as I am sure many other hon. Members do, that we could have a debate on this subject and go further into the whole matter, when it would be out of order to refer to anything which any party other than our own had said or done, and in that way have a really impartial discussion. We all want to do our best to help, and of that there is no doubt.
There are three problems to be tackled, and the first and, perhaps, the most important is the relief of need and providing a minimum standard for those who are worse off. The second problem would be to devise a method of encouraging people to save more for themselves, perhaps by considering a subsidy on savings of their own. The third problem is what are we to do to get the present generation at work to repay the debt to those who have now retired—not a debt due to them for what they have done for the country, although I recognise that fact—but the debt to them because the high level of wages and incomes today has created that inflation which, unfortunately, will destroy the value of the savings of the people who have already retired. I believe that it would be generally admitted that the relief of need is the first thing which must be tackled by any State pension scheme.

Mr. Percy Collick: I am interested in the hon. Gentleman's statement about the importance of the relief of need, and in that I am with him the whole way, but today the Chancellor is distributing £100 million, and not one penny of that, as far as I understand it, goes to the very poorest of the old-age pensioners. How does he justify that?

Mr. Johnson: If the hon. Gentleman had permitted, I was going a little further. What I am trying to suggest is that we really have to get down to thinking out

the whole problem. I do not think that the present system will work very much longer. We shall have, somehow or other, to tackle it in a different way. I was trying to meet it by saying that the first thing to tackle is the relief of need, and I believe that, to start with, there should be an inquiry, although I know that my right hon. Friend did not agree the other day, into the question of what really is an adequate standard for the very poorest people.
Let us get that quite clear to begin with, because there is very much argument and doubt about it. I understand that the hon. Gentleman and perhaps many other people would disagree with and dislike what I say, but I believe that the Government, having started the inquiry, must make it perfectly clear that any improvements which may be suggested by that inquiry should be applied to National Assistance scales for the very needy rather than increased retirement benefits for everyone. I believe that to be right, and I wonder—and this is a matter more directly concerning my right hon. Friend the Chancellor—whether there is a substantial reason why the National Assistance benefit should not be financed by the National Insurance contribution, instead of out of taxation, as it is now.
A change of that nature might not seem important, but I think that it would have a psychological value. Somehow, we must ensure that people feel that they have a right to these Assistance benefits when in need, and regard them as something towards which they have contributed. We want to break down their objection to them as being charity, because they are no more charity than the State pension itself. They have not paid the full cost of that either. If we could break down that attitude, it would be a good thing.
My final point on changes is a small one which would give a little help to all pensioners. It concerns what appears to me to be an unfairness of the present scheme. Today, only about half the pensioners draw the tobacco duty relief, which is worth 2s. 3d. a week. Inquiries confirm that those who do not draw it tend to be the poorer section of pensioners, those who are too poor to smoke or who are living alone. I suggest to my right hon. Friend that he might consider


withdrawing the present arrangement for tax relief and increasing the pension by 2s. 3d. The cost would be about £10 million a year, which is not really a very large sum. It would have a beneficial effect. The whole problem is a difficult one, as we all know. I do not believe that it can be solved by periodical increases in the flat-rate of benefit. What is needed is a new approach.
Any impartial person who heard my right hon. Friend's speech this afternoon, and who has read the Economic Survey, could not fail to be amazed at the strength of our position today and at the scope of the opportunities that still lie ahead for those who are willing to look for them. My right hon. Friend is, I know, fully aware of the perils as well as of the opportunities. When we think of the dangerous run on our reserves which was taking place last year, and the prompt action taken by my right hon. Friend the Prime Minister, when Chancellor of the Exchequer, and its immediate effect, it is not a bad thing to contrast those measures and their effect with what happened in 1947, 1949 and 1951, when we were faced with similar runs on our reserves.

Mr. Collick: The hon. Member should get his facts right. He talks about the strengthened position of our finances. Does he not recognise that the gold and dollar reserves are hundreds of millions of pounds less today than in 1951? Does he regard that as a strengthening of our position?

Mr. Johnson: I was about to contrast not the actual state of the reserves, but the action taken to strengthen them and its immediate effect. The hon. Member and others will remember that in 1947, when faced with a similar problem, we had cuts in investments and in imports, the direction of labour was introduced by the party opposite, food rations were reduced, the basic petrol ration was abolished and there was a complete ban on foreign travel. We do not have to do any of those things today.
In 1949, the housing programme was reduced and, above all, the £ was devalued. In 1951, the party opposite did the wisest thing that it could have done: it did nothing until it had had a General Election and left somebody else to deal with it. This year despite the serious blow to our trade and the effect

of the closing of the Suez Canal, which carried so much of our commerce, we appear almost to have taken our difficulties in our stride.
Apart from petrol rationing and the sharp increase in the price of petrol, from which relief is to be given as from today, the ordinary citizen has felt remarkably little inconvenience as a result of our financial difficulties and the future for our industries seems to be far from gloomy. The only conclusion that one can draw from that state of affairs is the one which I draw: that Her Majesty's Government today is in much surer and much more competent hands than it was in the five years up to 1951.

6.5 p.m.

Mr. William Blyton: One thing that can be said about the Budget is that throughout the long speech of the Chancellor of the Exchequer there was not one crumb of comfort for the old-age pensioner.
There were some remarkable statements in the right hon. Gentleman's speech. He said that the Government had a part to play in fighting inflation. It could be said that this is the third "budget" that we have had during the year. The first came last year, when the Government told us that everybody using the National Health Service must pay Is. for each item on doctors' prescriptions. Next, the bread subsidy was abolished, with the result that the price of bread today is higher than ever. The Government took away the milk subsidy and increased the cost of welfare foods.
Then, we had another "budget" statement early in the year to say that 10d. would be added to the cost of National Insurance stamps, in return for which there was to be less benefit. This is the third increase in the cost of the stamps since 1952. Sevenpence was put on in 1952, Is. in 1955 and l0d. this year.
The Government put up the cost of school meals. In 1955 they put Purchase Tax on everything, but a little bit of that impost is to be given back today. It must, however, be remembered that the tax is to continue upon clothing. Next, we had the Rent Bill, which will considerably reduce people's standard of life later in the year.
If that is the Chancellor's way of trying to fight inflation, by reducing the purchasing power of people in employment, he is bound to find himself in industrial trouble of the kind that we have seen recently. The Government, who believe in a free-for-all economy, cannot by political action expect profits and dividends to increase and raise the cost of living and then expect the trade unionists to sit at the end of the queue complacently accepting wage restraint. As one who has lived always in the trade union movement, I say that if by political action the Government continue to increase the prices of foodstuffs, the trade unionist is bound ultimately to demand an increase in wages to meet the additional cost.
I want to say a word or two about old-age pensions. The action taken by the Government in these little "budgets" which they have given us before introducing their big Budget has destroyed the purchasing value of the increase in pensions that was given in 1955. The pensioner, without any increase in his pension, is having to meet every increase in the cost of living that the Government put upon him. That is why there have been petitions from old-age pensioners signed by thousands of people asking for an increase in their pensions.
There is another aspect of the pensions issue about which there is no crumb of comfort in the Budget. The disregards under the National Insurance Acts have not been altered since 1947. A pensioner who may have a little superannuation pension from his employers finds that the disregard of 10s. 6d. has not been altered although the value of money has completely altered since the disregards were first instituted. For example, 30,000 miners will lose the increased pension that has been given to them, because these disregards have not been altered. I am speaking about people who have had to save up for their old age and have no fixed income except the old-age pension.
Many of the women have had to manage on the low wages and unemployment relief of their menfolk in the inter-war years. After bringing up their families they are now on old-age pension. It was a rough deal on the part of the hon. Lady the Joint Parliamentary Secre-

tary to the Ministry of Pensions and National Insurance to talk about our old people being bad managers. If anyone is a good manager it is the working-class old-age pensioner of today. He was brought up in a very hard school, on low wages, on unemployment benefit after means test, and on the allowance of Is. a week per child in 1931. We have resented very much that slur passed on our aged folk who helped to produce the wealth of the nation in the past.
The Chancellor said today that we depend upon the managerial staffs for our economy and that they ought to have something as an incentive, but surely, in our modern industrial economy, there are far more people elsewhere than on the managerial side. If the Government's programme is to depend on increasing exports next year, the men on the floor of the shop, the engineers, the semi-skilled men, and the men in the pits and in the shipyards, are as vital to the economy as are the managerial staffs who are to receive tax relief on incomes of £2,000 and over. What about giving an incentive to the men in industry who have been working overtime to secure an increase in our exports? If the Government give an incentive to the managers at £2,000 a year and over, they should give it to the men on the floor who, after working overtime to increase exports, find that their overtime earnings are taxed.
I am pleased that some tax relief has been given to the cinemas. I know men who own small cinemas in the mining villages who have been feeling the financial draught very keenly in the past two years. Figures given to me by people in my division show that they have been living on their capital because of the amount of money that Entertainments Duty has taken from these small picture houses. Whilst they would have liked to have had more than the tax concession given to them today, I think that we are on the right road towards making these small cinemas pay better than they have paid in the last two years.
When the Budget is explained to working men and they are told that their overtime will be taken into consideration as income to be taxed, while managers receive a tax relief because they are regarded as more important to the economy than the men on the floor, and when the old-age pensioners hear that


£100 million has been distributed today and they are not to receive a penny, and when they learn that the Chancellor went as near as he possibly could today to arguing for wage restraint in industry in the future, in spite of the fact that working-class people are shortly to bear enormous increases in rent, these people will say that this is a bad Budget. Any surplus that there was available should have been given to the poor and the aged folk who have been petitioning the Government to give them something to meet increased prices which the Government themselves have created by political action. When they read the evening papers tonight, many old folk will be full of dismay at a Budget which gives them not one crumb of comfort.

6.16 p.m.

Brigadier O. L. Prior - Palmer: I should like to comment upon two points made in previous speeches. One was made by the right hon. Member for Llanelly (Mr. J. Griffiths), when he said that his policy would have been to get the extra money required from what he called "the idle". This is the sort of fallacy that has been running through Socialist doctrine ever since the war.
There was a time, and I knew it and lived through it, when many people in this country, from the time they got up in the morning until they went to bed at night, did nothing but enjoy themselves; and they worked very hard in trying to do that. Those days have passed altogether. There has been a revolution since the war which has altered all that and I am happy that it has happened. It is all to the good.
The hon. Member for Accrington (Mr. H. Hynd) appears to be dissenting, but I ask him to name one single family in the country whose son is not working normal hours, and probably many more. It is complete nonsense to say otherwise and the hon. Member knows it. I happen to live among people like those whom hon. Members opposite criticise and I know.

Mr. H. Hynd: I am not prepared to name any family. Perhaps it would be invidious if I did, but everybody knows many people like that, who live in Bermuda and other places, and who do nothing at all but enjoy a very comfortable existence.

Brigadier Prior-Palmer: The emphasis is on "many". If the hon. Member were to get together all the people from Bermuda and the South of France, or from anywhere else that he likes to name, and take from them every single penny, would it make any difference at all to the wage packets of people in this country? Of course it would not. But, quite apart from those people, those who stay in this country are working extremely hard, and it is quite right that they should do so.
There is a section of the community who might be described as idle. They are the people who have retired, or some women who are actually not in employment. But I can assure hon. Members opposite, if they do not know it already, that these people work a great deal harder than most salary or wage earners in doing voluntary work from six or seven in the morning until goodness knows what time at night. I have seen them at it. If hon. Members opposite try to take away the last vestiges of income on which these people are living in retirement, they will kill all the voluntary work in the country on which we rely very much indeed.
The hon. Gentleman the Member for Houghton-le-Spring (Mr. Blyton) spoke derisively of the Chancellor for giving no incentives to those on the floor of the factory, but for giving incentives to those in the £2,000 a year class. The hon. Gentleman's memory must be short. He must have forgotten the incentives given in the last three Budgets to those very people. There was the reduction in taxation for people earning £12, £8 and £7 a week. There was the increase in family allowances. That, apparently, is to be forgotten, while the people who are now being helped have not had one single halfpenny of assistance since the war.

Mr. Fernyhough: Will the hon. and gallant Gentleman give way?

Brigadier Prior-Palmer: No, I am answering the point made by the hon. Member for Houghton-le-Spring.

Mr. Femyhough: They had the same reductions as everybody else—the same family allowances, the same everything.

Brigadier Prior-Palmer: The problem of the Chancellor of the Exchequer in these days is much more difficult than


it was in the old days. In those days the Chancellor trod a very wide path between inflation and deflation. Today, the situation is entirely different. My right hon. Friend is walking on a very narrow tightrope and there is no doubt in my mind, though I am not an economic expert, that almost anything done at a time of full employment is almost bound to be inflationary.
Some people say that if taxation is reduced that is inflationary. Others say that if taxation is increased it is inflationary. The fact is that the tightrope on which the Chancellor walks is so extremely narrow that it is a difficult one on which to keep a balance. I think that today the Chancellor managed to keep his balance better than almost any other Chancellor has done since the war.
It is not the task of the Government to direct and to control. That has been one of the great mistakes made in the past. It is the task of the Government to create the climate in which the people will prosper and will produce of their best. I suggest that in the Budget preceding this one we had the most perfect example of how that can be done. By trying to encourage investment savings and production the pressure on inflation has been reduced. The disinflationary Budget succeeded in raising our exports by £250 million and in improving our balance of payments position by £300 million. Also, there has been an enormous increase in savings, and industrial development has risen by 5 per cent.
That shows that this type of fiscal policy can have the desired effect without damaging the economy of the country. Yet, as a result of this, and of other policies of various Chancellors since the war, a certain section of the community has been finding it unprofitable to work any harder. Those people have been helped in this Budget to a certain extent, and I hope that in future Budgets even more will be done for them, because, otherwise, they will not stay in the country. We shall then lose our finest brains, because these people will go to places where their industry and brains are paid for adequately. The queues we have seen at emigration offices have been proof of that.
Everybody realises that wages have kept ahead of the rise in the cost of living

throughout. Figures can be quoted to prove this. It is those living on small earnings who have been suffering. I am grateful that the Chancellor today has done something to try to help those people who, owing to their situation in life, have found themselves earning less in salary than the wages of the top and higher paid industrial workers. There are large numbers of people whose salaries have not been raised since the war although the cost of living has gone up. They found themselves saddled with commitments which they were not able to throw off. They live in privately built houses, not in council houses. They have tried to educate their children at their own expense. Possibly they were wrong in trying to do that. Those people have had a raw deal.
This is not just Tory talk. There was an excellent article written in the Economist last week by an hon. Gentleman who sits opposite which said precisely that. Also, we have heard it from the trade unions. It was high time this was realised, for if we do not utilise those brains, that kind of ability and that kind of capacity, we shall never compete with other nations. It is sometimes forgotten that the education of these people cost their parents a large amount of money, even to the deprivation of their own comfort and at the sacrifice of many amenities. They really believe that they have done something for this country which should reap a greater reward than they have had so far.
I have had to tear up one page of my speech about earned income relief, but there is one aspect of it which has not been mentioned in this Budget, and which is long overdue. That is the question of the double taxation of the married couple. It seems to me fantastic that this continues. Its repeal is enshrined in our Tory policy, and it has been recommended, and why it has been omitted from this Budget I do not understand. What is happening at a time when we are trying to encourage women to help in our production drive? If the income of a married woman is at the Surtax level, she is taxed at the Surtax rate on the first penny she earns.
There is another rather serious, though not major, undesirable effect of double taxation in that there are people living together in this country, but who are not


married, merely to avoid that tax. Though they may keep from their friends this piece of news, they are careful to ensure that the Income Tax collector knows all about it. I suggest that this is not a sensible state of affairs.
I was extremely glad to learn that assistance is to be given to people who wish to keep their children at State schools over the age of 15. It has been sad to see able boys and girls taken away from the high schools and grammar schools because their parents needed them to help to augment the family income. I think that this relief will have the effect of enabling many people to keep their children longer at school than they would have done otherwise.
There is another aspect, and that is the question of university scholarships. I know only too many people of the kind I have been talking about who, although their children have won a county scholarship, have been unable to send them to a university owing to the rigid and crippling conditions of the means test. The test certainly needs to be overhauled. I do not suggest that it should be abolished. I do not suggest for a moment that somebody with a lot of money should be allowed a free scholarship to a university. I do suggest, however, that the level should be raised considerably, because, here again, children of ability cannot go to universities since their parents cannot afford to send them. I hope that the Chancellor will be able to do something about that.
There is another class which has not so far been mentioned. We have heard a good deal about old-age pensioners. Hon. Members might remind themselves that the Conservative Party has raised the old-age pension no fewer than three times since it came into power, and has also increased the National Assistance level, so that it should remain ahead of the cost of living. What has been done may not have been enough, but how much did hon. Gentlemen opposite do when they were in power?

Mr. Percy Shurmer: We raised the pension from 10s. to 26s.

Brigadier Prior-Palmer: I am speaking now about retired people who have just enough income to be above the National

Assistance level, but are below the Income Tax level.
There is a very large number of retired people living on about £150 a year. I wonder how many people would like to live on £100 or £150 a year. These people have had no relief from any Government, because it is so difficult to know how to help them. Admittedly, one way to help them is to reduce the cost of living and remove inflation, and we have been trying to do that long enough and with a certain amount of success. However, I do not believe that it is beyond the wit of the Treasury to find some way in which to give these people assistance. Some of these people will be helped by the reduction in the Purchase Tax. When Purchase Tax was imposed as part of the credit squeeze, they were more hard hit than most people.
In the old days it was the fashion to-save up for one's old age, and when one retired, one invested one's savings in a couple of houses. These people are among the landlords about whom hon. Members opposite talk so often. I know all about the big landlords, and how wicked they arc, but there are hundreds of thousands of small people who own little bits of property, bought with their life savings, from which they have been getting 7s., 8s. or l1s. a week, whereas a comparable council house has been attracting 28s. to 34s. a week. Something has now been done about that by the Rent Bill. These two things will help these people a little, but it will not be enough, and they deserve further help from the Chancellor.
I have been batting a long time for the hoteliers on the subject of the tools of their trade being taxed, and I am glad that they will now be helped.
I wish the Chancellor or the Minister of Housing and Local Government would encourage local authorities to build homes for lonely old people now living by themselves. A very enlightened scheme is being instituted at Horsham, and I would recommend any local authority to see how it is run. Local authorities should be encouraged to do this.
I wonder what the Government intend to do to improve relationships in industry. All hon. Members must agree that this is vital to our survival as a nation and to


the maintenance of our standard of living. More must be done than has been done in the past. The Government should use every effort and every aspect of publicity to put over to the people the facts of our economic situation so that we may combat the insidious infiltration into the factories of Communists whose object is not the welfare of the workers, but to wreck our economy. It is becoming very serious when we have a trade union leader saying that what matters is not the country, but the people whom he represents. That was one of the most serious remarks that has been made for a long time. Luckily, that man has been repudiated by a large number of more responsible trade unionists, but it shows a feeling that exists.
I wonder whether the Government could encourage industry in schemes for incentives on a greater scale. If it could be done, it could be interesting, and it would cut the ground from under the feet of Communists. One could direct the attention of the Communist in the factory to what happens in Russia, where, inside the factory door, there is a huge notice board bearing a graph and the names of those who produce more than the norm, which is not referred to as "sweated labour" in Russia. The workers in our factories must be made to realise that the only way in which they can obtain a higher standard of living and increased wages is by greater productivity and increased exports. That is fundamental.
I should also like to see some managements begin to realise what man management means. There are some excellent managers who understand man management and whose personal relationship with people on the factory floor is of a high order, but there are some who are still living in the past. I believe that the blame for the recent shipyard strike can be apportioned fifty-fifty. I believe that the shipbuilding industry is very out-of-date in these matters. I am informed that it is common for a man in the shipbuilding industry to be given two hours' notice. I do not know whether that is true. If it is, it is utterly monstrous.
I have had something to do with man management in my thirty years in the Army, and I suggest that if some of these gentlemen want good relations in their factories the finest thing they could do

would be to employ some of the officers who will now be leaving the Services. We might then get better feelings in industry. This may not suit some hon. Members opposite, because they came into power on the basis of class hatred and bitterness. The last thing some of them want is good relations in factories, although some of the more responsible hon. Members opposite do not agree with them and know that what I am saying is true.
I have been slightly controversial, but that is apt to happen when I am interrupted. I hope that the Chancellor will continue as he has begun, because I believe that he will be one of the greatest Chancellors we have had since the war.

6.40 p.m.

Mr. H. Hynd: We have listened to a speech from the hon. and gallant Member for Worthing (Brigadier Prior-Palmer) which was at times amusing and certainly, as he himself said, at times controversial. Surprisingly enough, I found myself almost cheering one or two of his remarks, particularly when he suggested better treatment for people on small fixed incomes. I shall look forward with great pleasure to seeing the Amendment which the hon. and gallant Gentleman will no doubt table when the Finance Bill reaches its Committee stage and I shall have great pleasure in joining him in the Division Lobby and seeing whether we can get something out of the Government for those people for whom he has expressed such great sympathy.
The hon. and gallant Gentleman misunderstood some of the reactions on this side of the Committee to some of his statements. For example, he deplored the two hours' notice given to men in the shipyards and compared that with his experience in managing men in the Army. Of course, it is not usual in the Army to give two hours' notice of dismissal to a man who is not behaving himself. There is not quite the same problem. Nevertheless, as the hon. and gallant Gentleman said, there is a tremendous need for better man management relations in British industry.
I suggest that the hon. and gallant Gentleman could make a contribution in that direction if he would not talk quite so much about trade unions being run by Communists, while referring to "some" employers being bad employers.


I hope that he will recognise that there are good and bad on both sides and he might admit there are some trade union leaders who are not Communists.

Brigadier Prior-Palmer: The hon. Member cannot have been listening very carefully to what I said. I leant over backwards to point out that the minority are Communists and that, by and large, trade union leaders in this country are mostly responsible people. If the hon. Member wants me to quote one name, I will say Sir Thomas Williamson.

Mr. Hynd: There is no doubt that the whole trend of the hon. and gallant Gentleman's remarks was to the effect that a lack of incentive was displayed by the workers, whereas the employers, the "brains of industry," without whom we could not exist, the people earning between £2,000 and £3,000 a year, were the people who really mattered, who ought to be encouraged, and who, indeed, have been encouraged by this Budget. That was the whole trend of his speech as I heard it, and I tried to listen very carefully.
The £100 million which the Chancellor has distributed today has gone almost entirely to the better-off section of the community. I think that even the hon. and gallant Gentleman will agree with that remark. In other words, this is part of the pay-off for the people who voted Conservative at the last Election and who are expected to vote Conservative at the next Election. This has been the kind of Budget which we expect from a Conservative Chancellor, and in that sense we are not disappointed.
The sympathy shown for Surtax payers is rather overdone. After all, even if it were true that some of these people have had no salary increase since the war, they are not the people for whom the greatest sympathy need be shown. Some, indeed, have not had a salary increase since the war because they have found other ways of augmenting their incomes, particularly through the expense account racket, which is becoming rife. It is time that the Treasury dealt with it. Incidentally, I hope that one of the sections of the community which the hon. and gallant Member had in mind when he was talking about people who have not had a rise for a long time to meet the increased cost of living was Members of Parliament.
Two of the reductions which have been made today have, of course, been simply the handing back of part of what the Government took away not very long ago. One is the 1s. tax on petrol. But even this Government would not have had the nerve to hang on to that Is. for very much longer. We need not be too effusive in our thanks about that concession. The other is the reduction in Purchase Tax on domestic articles, for which we are grateful. But we do not forget that the tax on domestic articles was increased by this Government not very long ago, so that, again, we need not overdo our thanks about it.
We have not yet had time to digest the Budget altogether, so our remarks today must be very brief. Nevertheless, I want to refer to two matters, as I am disappointed that nothing has been done about them. One is a matter of insurance. The position at present is that anyone can get relief up to £10 on insurance where it is the husband's insurance or the wife's insurance, but if both husband and wife are insured, even if the wife is insured on her own income, they cannot both get a relief of £10. If the Government are trying to provide incentives, and to encourage saving, the Chancellor might carefully consider this point. It would obviously not cost very much and would be a great incentive, because insurance is a form of saving. I suggest that the Chancellor should look at the provisions of the Income Tax Act, 1952, and consider whether that small relief could not be given in the way that I have suggested.
The other matter is to do with Entertainments Duty which, of course, includes the tax on sport. I think that everybody in the Committee was delighted to hear that the cinema tax was being reduced— I wish it had been abolished—that the tax on the living theatre was to be abolished and that the tax on sport was to be removed altogether. However, one tax on sport is left and it continues to be an anomaly. For the life of me, I cannot see why the Chancellor does not do something about it. It is the difference in the taxes on horse racing and on dog racing. I think that the Committee knows, because it has heard it ad nauseam, that there is a differential of 10 per cent. in the taxes on horse racing and dog racing. I had hoped that the Chancellor would


have taken the opportunity this year to put that anomaly right, and I do ask him to see what he can do about it.

6.47 p.m.

Mr. E. M. Cooper-Key: When my right hon. Friend introduced the Budget, he referred to the general theme as being one of expansion, and I certainly congratulate him on a realistic approach to the national problem today. It is not easy to produce proposals which at the same time bring applause in the country and confidence abroad. The crucial factor today lies in the £. The real test of the Budget is not whether some section of the community will be better off at someone else's expense, but whether in the next twelve months the £ will continue to hold its value.
If the £ fails, all fails, including our defence policy, pensions, the social services, savings, and the standard of living; and heaven help the old-age pensioner; worse still, our position as banker to the sterling area collapses. Upon the stability of the £ depends not whether we are a first or second-class Power, but whether we exist as an international influence at all. These courageous proposals will strengthen our financial position immediately and our industrial position in the near future.
On the domestic front, the proposals will be judged against a background of long-term inflation which is beginning to cause real social distress. In this connection, my constituents are getting rather tired of Ministerial speeches and quotations of the cost of living which bear no relation to the prices which they are paying in the shops. People in my constituency are continually told that we are spending more, saving more, and eating more, than at any time previously. A great deal of that may be because of this constant inflation.
The real distress and hardship in the country today will be found not in the working-class homes in the Midlands and other industrial centres, but in the bed-sitting rooms of suburbs and provincial towns, especially in areas along the South Coast. These are the very people who are the victims of this mid-twentieth century swindle, which has been perpetrated by successive Governments, in the depreciation of the national currency to 37½ per cent. of its 1939 value. That reflects very sadly upon the treatment of

thrift in the present age. I was surprised to hear a Conservative Chancellor discriminating against the saver.
During the debate many suggestions will no doubt be made about the causes and cures of inflation. The first cause lies in the system which allies wages to the cost of living rather than to production. During 1956 the increase in our national productivity was less than 2 per cent, above that of the preceding year. The semi-nationalised industries, over which the Government must exercise some control, increased wages by 5 per cent. I am in favour of high wages geared to high production, but it is time that the Englishman learned that he has no divine right to a higher standard of living than the Turks, the Armenians —

Mr. Shurmer: Or the Arabs.

Mr. Cooper-Key: —or the Greeks, but is entitled to only what he earns. The Government must set an example.
Many people believe that trade unions and management carry a fair share of the blame in failing to put before the employees the real nature of the problem of rising prices. I was in Canada a few months ago and noticed some posters exhibited in some of the factories. One poster said:
 Our work guarantees our wages.
Another poster said:
 We rob ourselves when high costs steal wages.
It is immaterial who put up those posters, but I wonder how long they would stay up in British factories.
A further contributory factor towards inflation is to be found in our social services. I am in favour of these services, but there is no doubt that many people who could easily afford to pay for them are availing themselves of them at the expense of others who are less well off. Social services should be paid for by those who can afford them.

Mr. A. Blenkinsop(Newcastle-upon-Tyne, East): Does not the hon. Member feel that social services are in fact being paid for largely by those who can afford to pay? Are they not largely paid for through Income Tax, and other taxation?

Mr. Cooper-Key: Yes, but many people are availing themselves of these services who could easily pay for them out of their own pockets.

Mr. Shurmer: Who are they?

Mr. Cooper-Key: After a man has provided for the board and lodging of his family it is not unreasonable that he should wish to educate his children rather better than he himself was educated, and also provide rather better accommodation for his wife, or save something for his old age. There is no reason why many of these services should not be paid for by those who can afford to pay for them.
The social services were devised at a time when we expected a level of unemployment of about 10 per cent. We have now enjoyed seventeen years of full employment and it is high time that this burden upon the resources of our nation was re-examined. It is a fact that many people are making an unnecessary demand upon our national resources which our resources are not able to meet. That is the nature of our domestic problem of inflation. The solution is easy to find, if the courage is there.
I want to make a plea on behalf of the hotel industry, which is the largest dollar earner in the country. The Treasury has always treated this industry harshly. Alone of all industries it pays Purchase Tax upon the tools of its trade—furnishings, glass, china, etc.—and no capital allowances are granted for alterations and improvements. The Government make available interest-free loans for fuel-saving schemes, and just as good a case can be made out for a similar concession for the improvement of our hotels.
The Chancellor has introduced a very courageous Budget, and I am sure that it will be applauded by all sections of the community.

6.56 p.m.

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East): I intervene only very briefly to deal with one subject, although I should have liked to begin a general discussion upon the issues raised by the hon. Member for Hastings (Mr. Cooper-Key). I will leave him to the tender mercies of my hon. Friends. I wish to call attention to a special matter in which I have been considerably interested over a period of years. This matter was dealt with in a rather unhappy way by the Chancellor of the Exchequer.
I refer to his decision to dispose of the larger part of the National Land Fund. I do not suggest that this point is of the

same importance as some of the other issues with which we have been dealing, but it is of very considerable interest to many people, especially young people, who had been looking forward to the possible future use of the Fund for the development of our national parks and of sport and activities in the countryside. This is a matter which should be of interest even to the Chancellor.
When one considers the minute value —if there is any value at all—that the Chancellor will get from this proposal, one is amazed that he should have spent time in considering it. He could be said to have misled the House as to the intention when the Fund was set up. If I heard him aright, he said that it was set up purely to deal with the question of the taking over of land by the State in lieu of the payment of death duties.
It is quite true that that was the legal purpose for which the Fund was established. Immediate use could have been made of the Fund in that way under the existing law, but my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) made it clear that his hope was that it could be made available for the positive development of some of our outdoor amenities and activities. He specifically mentioned at that time his great hope that it would be of value in helping towards the establishment and development of our national parks, in particular, as one of many other possible purposes.
It is quite amazing that a Chancellor of the Exchequer, in the midst of many of his other preoccupations, should have announced the abolition of the greater part of this Fund. He was fair enough to admit hat its abolition will do nothing to help the Budget. It makes no kind of contribution to budgetary financing of any kind. Again, we may ask why he bothered to abolish it. Presumably he did so because as long as the Fund remained at its present size there was always bound to be some pressure—in my view rightful pressure—upon the Government of the day to make use of it for the purposes for which it was established.
One hon. Member opposite referred earlier to the question of the condition of our roads. From time to time there has been a great deal of agitation about what is often called the "selling" of the Road Fund and its use for other purposes. Here, in effect, we have a Chancellor who


is "selling" this Fund, which was quite plainly intended for the benefit and encouragement of outdoor activities and the help of younger people in particular.
It is very extraordinary that he should have taken this step. I should have thought that it was common ground on both sides of the Committee—it is not a political issue of any kind—that we want to do what we can to encourage outdoor activities. The people who have spent so much time and effort, in a voluntary way, in trying to defend the countryside from spoliation, are, one would have thought, the people who might have received encouragement. The national parks have been starved of finance. The efforts made by a number of distinguished persons, including Lord Strang, the Chairman of the National Parks Commission, to secure the use of this Fund, which was established for the benefit of the national parks, have been turned down and, indeed, the Fund has now been disposed of. This will be regarded, certainly by all those active members of organisations who hope to make use of national parks, as an indication of the Government's complete lack of any interest in or consideration for their affairs.
The Government may well say that this is not a matter which has any particular electioneering value. It may be that any consideration of the proper use of this Fund would not have persuaded a single Tory who did not vote in the recent by-elections to vote in the next Election. If electioneering is the major purpose of this Budget, such a consideration perhaps would not have contributed to it, but it would have been a very useful and a valuable act if the Chancellor had at least defended the Fund and offered some suggestions on how it could be most practicably used. Instead of doing that, he has taken this occasion to destroy it. The right hon. Member the Economic Secretary seems to be groaning and wincing and moving about, so perhaps he would like to make some comment on the matter, although I do not suppose that he knows anything about it. If he has any interesting remarks which he would like to make, perhaps he would make them now?

Mr. G. B. Drayson: Surely the hon. Gentleman has mistaken the

Chancellor's intention. The Chancellor has left £10 million in the Fund. He said that £50 million was too much and he has reduced the Fund to £10 million. If £10 million is shown to be inadequate and there are activities which require assets from the Fund, no doubt some money will be made available.

Mr. Blenkinsop: I am afraid that the hon. Member does not know the history of this matter very clearly. There is no doubt that the Fund is only to be used for the purpose of acquiring and taking over certain assets as provided for in legislation, and I would question whether the sum of £10 million was completely adequate. I am calling attention to the fact that when the Fund was set up it was specifically mentioned that it was intended for use in the future for the encouragement of national parks, among other things. So far, although representations have been continuously made, no effort has been made by the Government to honour that original undertaking. That is the point that I am making.
The Chancellor quite clearly indicated that he had no intention at all of allowing extra funds to be made available for the purposes that I have mentioned, which could easily make use of the interest on the whole capital sum and usefully make modest inroads into the Fund itself. These are not large sums which would involve us in any way in any inflationary expenditure—far from it.
The Fund would merely be a means of helping to defend the countryside against some of the industrial dangers which have approached it from time to time, especially in areas of outstanding natural beauty, and it would have made a real contribution and been of real assistance to many young people who, in this land of ours, have little enough opportunity of getting the fresh air and exercise which they certainly ought to have. This Fund was designed for that purpose, and it will remain a matter of deep disappointment to many people that the Chancellor has taken the opportunity, in this Budget, to destroy the hopes of a great many young people.

7.5 p.m.

Mr. Ronald Russell: I hope that the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) will forgive me if I do not pursue


his argument. I want to revert for a moment to something which was said by my hon. and gallant Friend the Member for Worthing (Brigadier Prior-Palmer) when he was talking about man management. I could not agree more than I did with what he said about the need for improving relations between management and men. I think that the example which he quoted of failure on the part of management is something that is the cause of a good deal of our trouble today.
I mention that because there are two factories in the Borough of Wembley where there are excellent arrangements between the management and the men, largely because the management know how to look after the men. They are so excellent, in fact, that neither factory employs a single trade unionist. I will not make any comment on that except to say that quite clearly if there were need for a trade union organisation in those two factories obviously one would have been formed. The fact that one has not been formed in either factory means, I suggest, that the men are well satisfied with the existing conditions.
One factory, which employs about 100 men, makes bismuth metal, and the other, which employs about 300 workers, makes chewing gum. Which is the more important of those two commodities I do not know, but at any rate both managements seem to run their factories on such excellent lines that the conditions among the workpeople are almost a model, so there is no demand for a trade union organisation, and the men are perfectly happy without one.
I do not want to pursue that subject further. I should like to turn now to the Budget, and I hope that my right hon. Friend the Chancellor will forgive me if I do not take up the time of the House in saying how much I agree with what has been done. I should like to refer to one thing which has not been done in the Budget. That is in relation to the tax on greyhound racing totalisators. I mention this because I think that it has been recognised by previous Chancellors that for some time a case has been made for remedying the injustice done to greyhound racing by the 10 per cent. pool betting duty which applies to the greyhound totalisators only and not to horse racing totalisators.
I am not one who wants to tax horse racing any more than it is taxed at the moment, but I think that it is unjust that the pool betting duty should be applied to greyhound racing totes when it is not applied to horse racing totes. The receipts from the duty have gone down steadily from £94 million in 1948–49, the first full year when it was imposed by Sir Stafford Cripps, to £5·8 million in 1954–55. There was a slight increase to £5·9 million in 1955–56. It may be that the receipts have now evened themselves out. The fact that they have gone down from the original highest total—presumably from the estimate that Sir Stafford Cripps made of the receipts at the time—shows that the duty has not achieved its purpose. In the last calendar year, 1956, I understand that there was a reduction of about 10 per cent. in the attendances at greyhound racing meetings.
In other words, although possibly the receipts from the pool betting duty may have slightly increased, nevertheless there has been a reduction in attendances at greyhound racing meetings. I realise that the removal of the Entertainments Duty from all forms of sport will help a little and will relieve the greyhound racing industry of tax, amounting altogether to about £500,000 a year. That is something which will help it. I suggest, however, that the injustice of taxing the greyhound racing tote but not the horse racing tote is something that ought to be removed. It is an injustice on the industry as a whole, and I am disappointed that it has not been looked at, particularly in view of the small amount which it would cost to remove that tax or, at any rate, to curtail it.
I wish to say something about a subject which has not been touched on since the Chancellor sat down, the question of the export trade. My right hon. Friend said he looked forward to a further increase in exports. I expect that most hon. Members have read the Economic Survey, or at any rate the parts in which they are particularly interested. They will have read paragraph 88, which says:
The primary producing countries will in general offer further openings to United Kingdom exports.
My right hon. Friend laid stress on the North American market. I hope that he is right. I hope that the North American market this year will show as


big an increase as it did last year, but what disappoints me is that there has been a falling off instead of an increase in some of our conventional and very valuable Commonwealth markets, for instance, in Australia and New Zealand. If there has not been a falling off in actual exports, there has been a distinct falling off—for a number of years—in the proportion of their imports from this country. That is a distressing sign because it shows that other countries are gaining in the share which they are obtaining of the imports of those countries and, therefore, are encroaching on our markets.
Over the five years from 1950 to 1955 in the four older Dominions, Australia, New Zealand, Canada, and South Africa, there has been a decrease in our share of those countries' imports and an increase in the United States' share of their imports. I shall quote only the example of Australia. In 1950 the United Kingdom share of Australia's imports was 51·8 per cent. and in 1955 it was 44·2 per cent. On the other hand, the United States' share was 8·2 in 1950 and in 1955 it was 11·9 per cent. I will not weary the House, but I could quote similar figures for the other three older self-governing countries of the Commonwealth.
That suggests a very dangerous trend. I am sure it is due to the fact that we are not in a position to give a better rate of Imperial Preference to the primary produce which we import from those countries to the United Kingdom. Accordingly, not only have they not been able to help our exports by giving us any increased preference, but in the case of Australia there has been a slight reduction of some items in the trade agreement recently negotiated—which is the subject of one of the Budget Resolutions we passed today. Now we have a trade delegation coming from New Zealand, if it is not already here, to discuss a rather similar trend.
The reason for that situation is the General Agreement on Tariffs and Trade. I shall not weary the House with arguments for or against that, but I suggest that it shows a rather dangerous trend. While clearly it is a good thing for us to be gaining exports, so far as their total value is concerned, into the North American market of Canada and the

United States, it is not going to do us very much good if we are losing ground in our old Empire markets of Australia, New Zealand, and South Africa. The economic policy which was started by the party opposite and has been continued by the present Government has led to that, and from it there seems to be no departure even at present.
That brings me to the question of one country in which there seems to be room for an enormous improvement in our export position. If we do not get that improvement I suggest that we ought to look at the source of imports. I refer to the Argentine. It is most astounding, when looking at the December issue of the Trade and Navigation Returns, to find that the Argentine has a favourable balance of trade with this country of more than five to one. It is worse than in 1955, when the balance was very nearly four to one. It appears that we are not taking as much meat or wheat from Australia as Australia is willing to send us, yet we are buying large quantities from the Argentine and piling up an adverse balance of trade against us.
That is a policy which I think ought to be looked at. For example, last year we spent £56 million in buying meat from the Argentine. At the same time we bought £70 million worth from Australia and £35 million worth from New Zealand. I am sure the reason is the minute amount of preference we give to Australian and New Zealand meat—about ⅔d. per pound on beef and ¾d. on mutton —it may be the other way round; I never remember which is which, but at any rate it is a miscroscopic preference—compared with the value before the war. That might be a reason why our importers are not buying more from Australia and New Zealand and are spending so much in the Argentine. It might be one of the reasons why the Australians are rather resentful and are contracting their imports from this country.
We spent, very rightly, £77 million in buying wheat from Canada last year, but bought only £16 million worth from Australia, yet we bought £26 million worth in the United States and £8½ million worth in the Argentine. There is no preference whatever on wheat and we have no means of encouraging importers to buy more wheat from Australia in preference to Argentine or


the United States wheat. At one time there was a preference of 2s. a quarter on wheat. That was abandoned by the Anglo-American Agreement in 1938. Since then wheat has been on the free list. I know that the General Agreement on Tariffs and Trade prevents us from increasing that preference, but because of these defects I am worried about the prospects of our policy for increasing our export trade.
While I am all in favour of increasing our trade with the United States and, of course, with Canada—incidentally there is plenty of room for wiping out an unfavourable balance with the United States—it would not be much good to us in the long run if we sacrificed the markets that we have in Australia, New Zealand, and South Africa, because by the restrictions of the General Agreement on Tariffs and Trade we were not able to continue more preferential trade with those countries. I hope that the Government will look at that danger and see that we do not neglect our Commonwealth markets in return for mere will-o'-the-wisp American markets.

7.19 p.m.

Mrs. Lena Jeger: This will be a bitterly disappointing Budget for anyone who was foolish enough to hope that the Government would give any help or encouragement to the poorest and most needy in our country.
Many people are desperately tired of lectures about the necessity to increase the total national product. So many of them have not got it in their power to do that directly. Those words are falling again and again in a monotonous knell on the ears of old-age pensioners and lower-paid workers who, by the very nature of their employment, however hard they work, cannot appreciably add to the gross national product, which is supposed to be the preliminary to any increase in the standard of living.
I propose to confine myself to one or two special points, but I must, first, refer to another matter which was mentioned by the Chancellor. This is the question of continuing high interest rates. I have never pretended to be an economist, but it seems to me, particularly as a member of a local authority, that high interest rates are one of the most inflationary elements in our economic situation. The

Chancellor quoted the higher figures of spending on education, health and other social services, but he did not tell us how much of that additional expenditure is caused by higher interest rates on loans.
Every time a local authority builds a school or a regional hospital board extends a hospital, the charge on the money which it borrows goes up, and the increase has to be met by the ratepayers or taxpayers, thus further impinging on the standard of living. It is fair and reasonable that the citizens should complain on this score. There was nothing whatever in the Chancellor's speech to help in this respect.
I also cannot understand why, after making it so difficult for people to obtain bank loans, the Chancellor still thinks it essential to continue high interest rates as a disincentive to borrowing. A man cannot get a loan unless he desperately needs the money for an approved purpose, and if he desperately needs it I cannot see the fairness of charging him the present high interest rates, which result in higher prices for the end product and more inflation in the economy.
I wish to refer to one or two things omitted by the Chancellor. The right hon. Gentleman showed some concern, which we all welcome, for the family man, but why is his concern limited only to the family man who is above a certain income level? I had hoped very much that the Chancellor might have found it possible to extend family allowances to the first, the most expensive, child. This is something which many of us have hoped for for a long time. I have never heard a really good case made against it. Any parent could tell the Chancellor— the right hon. Gentleman must know from his own experience—that it is with the first child that help is most needed. By that means, the right hon. Gentleman could have extended some benefit to families in the lower income groups, but it seems that they were not considered by him.
I cannot tell the railway workers in my constituency who earn £6 or £7 a week that there is anything in the Budget for them. We were told that it was a good thing to encourage families which were trying to keep children at school. Of course it is, but it does not cost a man earning £8 a week who has two children any less to keep those children at school


than it does a man earning £1,000 a year, who will get some tax relief from the Budget. It may be illogical to oppose taxation reductions given to some people on the ground that they do not apply to other people, but if there were time I think we should have to apply our minds to the whole problem of the fiscal relation between the individual and the State.
The Royal Commission on the Taxation of Profits and Income considered whether we were not at the point where the activities of the Inland Revenue and the National Insurance Department could be co-ordinated so that one Department would both collect the taxes and distribute the benefits. The Royal Commission rejected the proposal, and I could not support it in the form in which it was presented to the Royal Commission, but I believe the time is coming when we have to bring some completely fresh thinking to bear on the issue and consider whether, to relieve the severest measure of poverty, the Inland Revenue will not have to be used as a means of giving to our citizens as well as taking from them. Otherwise, we are always in the position of taxation reliefs bringing no help to the poorest, who often have the largest families and are in the most difficult position.
There was nothing in the Chancellor's speech about the repayment of post-war credits. I feel that the post-war credits now represent a debt of honour. It must be a great disappointment to many ageing people that the right hon. Gentleman, at a time when he seemed to have a fair amount to give away, did not see fit to reduce even by a few years the qualifying age for the repayment of post-war credits.
I had been hoping to hear something about one matter which was accepted by the Royal Commission. I refer to special Income Tax allowances for totally disabled, especially blind, people. With great courage and great endeavour, many such people train themselves for ordinary occupations. They go out into the world taking jobs as telephonists, typists, and masseurs, and they do useful work in the community. They could remain at home and ask for National Assistance, but many of them, with a spirit of independence which we must admire, go out into ordinary employment.
When a blind man takes a job as a typist or a telephonist, it entails expendi-

ture over and above that which a sighted typist or telephonist has to meet. The blind man often has to have help to get to and from work, although many manage alone, and often has to have someone to help at home. The Royal Commission was right to recommend that some relief should be afforded to recognise the courage and independence of such people who go out to work.
The Royal Commission recommended a special allowance of £100, and I think that that would be fair. I urge the Chancellor to consider the matter, particularly in respect of blind people, who have a special call upon our consideration. The amount of money involved cannot be very large, but the relief would give great encouragement to many people who are severely afflicted.
The Chancellor spent much time discussing the position of the Surtax payer. I cannot remember a single occasion when I have agreed with the hon. and gallant Member for Worthing (Brigadier Prior-Palmer), but I agreed with him today when he said that the Chancellor should have spared a thought for the problem of the aggregation of the incomes of married couples. It is unacceptable to me as a principle that a married woman's income should belong to her husband, and I should not have thought the Chancellor would have accepted it.

Mr. Shurmer: Surely it is more often the case that the man's income belongs to the woman.

Mrs. Jeger: Perhaps it is more often the other way round. Yet, from the Chancellor's point of view, a wife's earnings belong to her husband. If a couple are working as doctors, for instance, the woman is taxed at Surtax rates on the first penny of her earnings, irrespective of the value of her work to the community.
I should like the Chancellor to look at this for two reasons. First, because I think that this is a shadow from the past subservience of women, which I think that even this man-ridden Government should try to put right. Secondly, because I think that many professional women are holding back their services from the community for this very reason; because, by the time a woman has paid someone to help in the house, perhaps to


look after her children, by the time she has met her own extra expenses in travelling to her job, and the Chancellor then starts taxing her from the very word "Go" at Surtax level, there is very little encouragement for her to work at all.
That leads me to my final point. We have heard a great deal lately of the need for more women, scientists particularly, to play their part in our developing nuclear programme. I, for one, welcome this, but what happens when a woman does her day of skilled work in an atomic laboratory, working on all the most advanced and exciting discoveries of the modern age? As I say, she is first taxed at Surtax level from the word "Go." Then, when she leaves her factory, her laboratory, at this time of high endeavour and great discovery, as soon as she gets home she is expected to use a hand-operated sewing machine—because, if she uses an electric one, the Chancellor refuses to reduce the Purchase Tax on it from 30 per cent. to 15 per cent. [HON. MEMBERS: "Shame."] I really cannot understand this discrimination.

Mr. George Chetwynd: Let my hon. Friend make an atomic one.

Mrs. Jeger: Is the use of electricity a sin of Eve which must be punished by the Chancellor with this penal taxation? What kind of thinking is going on in a Treasury that says, "We will reduce the Purchase Tax on a sewing machine which a woman still turns by hand." If hon. Gentlemen do not understand, perhaps I may explain that turning the wheel by hand leaves only one hand free to arrange and deal with the material which is being sewn. It is possible to put a sheet sides to middle in half the time if one can work with one's foot on the pedal of the electric motor and so have both hands free to deal with the work. I do not expect the Chancellor and hon. Gentlemen opposite to know about these things. I only ask them to think about them for a moment, and to listen patiently to those who do.
Purchase Tax, of course, should never have been put on household goods at all. It was the party opposite that, for the first time, put it on pots and pans, and the tools of the housewife's trade. We do not buy these things because we want them—they are the implements of

our drudgery. We spend money on them that we would much rather spend on, perhaps, a new hat or something which would give us greater pleasure. These things are needed in a well-equipped and well-run home.
During the present century there have been many changes in our society. One which I welcome, is the decrease in the number of people earning a drudges living as domestic servants. Now, however, we are faced with the opposite alternative. We are without that vast body of people doing servile jobs, people whom the Victorian upper and middle classes used to exploit, but when we try to use the inventions of science to bring some light and efficiency into our homes the Chancellor penalises us with taxation.
The right hon. Gentleman announced today that, in certain cases, this 30 per cent. tax is to be reduced to 15 per cent. How mean that is. Why not take the whole thing off altogether? If he will not do that, why is he so pernickety as to keep it at 30 per cent. on anything which is designed for operation by electricity or gas? Anybody would think that we were living in the Stone Age, when we were supposed to use a bit of flint to get a spark to start a fire. Surely we live in an age when woman has every right to expect in her home the use of electricity and gas.
I have referred to sewing machines, but the Chancellor has put us in an equally stupid position over electric irons. I wonder whether any hon. Gentleman opposite has ever tried to iron a shirt. Until one gets used to it, shirts are very difficult to iron, and take a lot of time. All that the Chancellor does about this is to reduce the tax on irons—unless they are electric ones. Does he really mean that he wants us not to use electric irons? Is the country, after six years of Conservative misgovernment, short of electricity? Is the power station programme running down? Docs he not know that electricity now costs so much that no housewife is extravagant with it?
Today, more married women than ever are going out to work—and our economy needs it. There is a lot of argument whether it is a good thing or not, but I was very interested to see a report from the National Council of Women the other day which said that there was no evidence that the homes or the children of


women who went out to work were any less well cared for than those of women who did nothing else but attend to them all day.
Believe me, whether or not a woman is a slut does not depend on whether or not she goes out to work. Some of the best-kept, most-scrubbed homes in my constituency are those of women who are up at four o'clock in the morning cleaning out the carriages at Euston Station and then going back to do their own work. It is because so many women are going out to Work that I think that we have an especial right to ask for consideration in these matters.
Again, why should a refrigerator be regarded as a luxury which has to be taxed? I should have thought that as we are trying to raise our standard of living, as we believe in higher standards of hygiene and welfare, a refrigerator in every home should be our objective. I believe it to be one of the test standards of a real rise in the standard of living. Are we not supposed to have hot water in our homes? If we buy an electric immersion heater, we pay tax on it. This not only affects us in our own homes, but affects the expenditure of schools, hospitals, local authorities and institutions of all kinds which have to buy these very important things.
We hear a great deal about smokeless zones—something else which I very much welcome—but if a woman, trying to be co-operative and not use fuel that smokes, decides to pay £10 for an electric con-vector heater, she will have to pay £3 Purchase Tax. What sense does that make? If she buys a vacuum cleaner— and surely that should be looked on as a basic necessity in every home—she has to pay over £8 in Purchase Tax on a cleaner costing £26.
Electric irons are becoming very expensive. Nowadays, it is possible to pay about £6 10s. for one—plus 23s. Purchase Tax. The basic prices of these goods are going up all the time, and, of course, the Purchase Tax goes up in proportion. The question whether a household can or cannot just manage to get a washing machine might well be decided by the fact that a washing machine priced at about £40 bears over £10 Purchase Tax.
It is interesting to note, in considering all the apparatus using electricity and gas in the home, that there is one thing

which the Chancellor of the Exchequer has kept completely free of Purchase Tax. That is the cooker. This seems to bear out the old adage that men really take their stomachs very seriously. They leave us with our tax-free electric cookers, but we have to iron their shirts with our taxed electric irons and pick up their dirt with our taxed vacuum cleaners. Indeed, this Budget might have been described as the "anti-housewives' charter", because the concessions are so small. The great range of unfairness is really quite incomprehensible.
It may be that, during the passage of the Finance Bill, the Chancellor will find it possible to reconsider these matters. I hope that he will do so not in any partisan way, but will remember that they touch the needs of millions of our people in their homes.

7.42 p.m.

Dame Irene Ward (Tynemouth): I thank my right hon. Friend the Chancellor of the Exchequer for the beginning he has made in his Budget in dealing with the taxation problems of those living on small fixed incomes. It must be five years now since I, supported by a number of my hon. Friends, made representations to the Chancellor that this was a way of helping those living on small fixed incomes to meet the rising cost of existence. It has taken considerable time to achieve the objective which I had in mind.
I am not surprised that it is the present Chancellor who has made the breach with Treasury tradition. I recollect very well that many years ago, during the war, he and I worked together on what was called the Tory Reform Committee, the recommendations of which set the pattern of many of the social services in operation today. When my right hon. Friend the Chancellor took over office, I felt that he was likely to be receptive to the kind of proposals which were put forward on behalf of all those who have these particularly difficult problems in life to face. I offer him my thanks and my congratulations.
I know that in the battle of life fought by those living on small fixed incomes this is a very small step forward; but I have always held the view that the only way to help this section of the community is to take them group by group and try


to find the appropriate measure of relief. One such measure of relief is the introduction of a special scheme of taxation relief such as my right hon. Friend has proposed. Although the actual assistance necessarily is small, I am pleased that it has created a breach in Treasury tradition.
During the live years during which I have struggled to get acknowledgment of the problems of these people, and obtain for them special tax reliefs, I have felt that it was not the amount of money involved which was the hurdle. After very long experience in wrestling with the Treasury, I have found that the Treasury always dislikes creating any new precedent, particularly in taxation matters. Year after year, the correspondence I have had with various Chancellors of the Exchequer has shown that that was the major hurdle. Therefore, my right hon. Friend deserves the very warmest congratulations for his imaginative action.
Everyone will agree that this is an imaginative Budget. That a part of the imagination which my right hon. Friend has brought to bear upon it should have had some fruitful results for those on small fixed incomes, fills me with very great appreciation. Of course, it would not be consistent with my approach to these problems if I were not to add that, the breach having once been made, it offers for the future unlimited opportunities for giving further assistance to that section of the community which has had the hardest treatment of all.
I realise that on Budget day it is a break with tradition to carry on the speech making until the normal hour for the rising of the House, and I have only a few words to add, I welcome the new arrangements made for shipping. This will give great encouragement to those interested in shipping. On the North-East Coast, we have a great tradition both in shipping and in shipbuilding. Many of my constituents earn their living in these industries and the fact that, in a very difficult year for our finances, the Chancellor should have had an imaginative approach to the problems facing shipping, which is such a source of strength to the economy of our country and so bound up with the traditions of our national life, gives great satisfaction to me.
If the records of HANSARD were searched, it would be found that Chancellors have received more blows than kind words from me, but on this occasion I am delighted to congratulate my right hon. Friend. I look for further favours to come for the benefit of those who really deserve consideration and sound treatment from the Chancellor of the Exchequer and from the House of Commons as a whole.

7.49 p.m.

Mr. George Chetwynd: I am glad to have an opportunity to take part in this debate and to express my immediate and almost instinctive reactions to the Budget. The hon. Lady the Member for Tynemouth (Dame Irene Ward) seems to think that the Chancellor ought to be congratulated for his imagination. I do not wish to congratulate him on that, because I realise that most people will have to make considerable use of their imagination to discover what will be their benefit from the Budget. Indeed, it will be only in the imagination that many of them will get any benefit whatsoever.
In my view, the Chancellor is to be condemned for missing a glorious opportunity. This Budget, it seems to me, is dictated more by political considerations than economic considerations or considerations of social justice. Let us look at the chance which the Chancellor had. It is the first time for many years that he has been able to count on a reduction in defence expenditure to help him to do something to spread certain benefits. He decides that he can have £100 million to disburse, and if one looks at the recipients one sees that: in almost every case these benefits go to a very narrow, small, favoured section of the community.
The Budget is distinguished more by what it leaves out than by what it contains. For instance, there is no mention whatever of any benefit for the old-age pensioners, as such. There are a few crumbs from the table, as it were, for those living on small fixed incomes, which shows that the Chancellor realises their need and their plight, but if those living on small fixed incomes at certain levels are to benefit from tax concessions, how much greater is the need of those on even smaller incomes who are not within the (ax-paying bracket at all?
I would have thought that, if the Chancellor had £100 million to give away in this Budget alone, he could have devoted £50 million to the relief of distress amongst those who are worst off; that is, the old-age pensioners, the sick and disabled, but, instead, we see once more a Conservative Government getting their priorities wrong. Instead of helping those whose need is greatest, they give their blessings and benefits to those who may be comparatively hard up, but who, nevertheless are so much better off than the vast majority of the people.
If the Chancellor can give relief to some of the old-age pensioners and to some on small fixed incomes, surely the case is overwhelming for giving it to all, no matter whether he could not give everything that we wanted him to do. At least he could have made a start with either 5s. or 7s. 6d. on the pension, which I think would have been the best way of tackling it and of disbursing the £100 million.
Again, if we look at those outside the range of Income Tax, those with large families, the low wage-earner, and so on, again there is no relief for them in this Budget. Two things, I am certain, could have been done to help them. First, the iniquitous National Health Service prescription charge could have been removed, and, secondly, rather than play about with children's allowances for people in the Income Tax brackets, it would have been far more just, and far more wise in my view, to have extended family allowances either by an increase in the amount for each child or by extending the allowance to the first child. That would have given a measure of relief to those who are hardest hit.
I welcome the amount which is given in the increase for children staying on at school. It is a very desirable thing, but I am not so sure that the £25 difference will encourage people to keep their children at school. I think that it will have to be tied up with increases in maintenance grants and allowances and things of that kind before they will make up their minds that their children should stay on at school after the ordinary school-leaving age.
The Chancellor posed the main question how, since we are living in a world of competing nations, we can keep our

exports up and our prices down. What he fails to realise is that it is Government action over the past year which has tended more than anything else to put our costs up and to price us out of overseas markets. I could detail them all, but they have all been given before—ending with rents, milk, bread and all the rest—and these are essential parts of ordinary household expenditure, and represent costs which have all gone up through Government action. We cannot expect the worker to refrain from putting in his own demand in the free-for-all economy in which we seem to be living.
How can the Chancellor think that the ordinary worker will work harder, pro-duce more, and be more cheerful and co-operative in the future when the worker who is looking for something in this Budget gets nothing, and sees the blatant discrepancies between his contribution and that of a minority—the Surtax payers? I dare say that there will be a song in the heart of the Surtax payers in the morning, but it will be a chilly morning for the ordinary worker and producer.
I do not accept that the future success of our economy depends upon these few people and the effort that they have put into it. I do not accept that the majority of them are deterred from extra effort or initiative by the fact that they have to pay rather more Income Tax than other people. I do not think that it works that way. We have had one or two so-called incentive Budgets from Conservative Chancellors before, which were supposed to deal with this problem, but they never have dealt with it, for the simple reason that in six years of Tory rule we have seen the gap which was closed under the Labour Government once more widening between the top and the bottom.
It is because we have departed from these feelings of fairness as between all sections of the community that I believe that we are not getting the effort today. In my view, it has nothing to do with Income Tax at all, but is because the Government have reversed the trend which we established when in power.
I do not think that we have to bribe a section of the community like this to give of their best. The small number of people in this group who have the initiative, the brains, give what they have because it is part of their nature, part of


their ability and their willingness to do it, and I believe that the Government are completely on the wrong lines in the way they are going. Of course, we all know why the Chancellor has done this. The cheer which he received at the end of his speech from the Tory Party is the measure of the pressure which has been put upon him as a result of the falling-off in Conservative votes in recent by-elections. This Budget is designed to rally the faithful. [An HON. MEMBER: "The unfaithful."] It is to bring the unfaithful back. Nevertheless, what the Chancellor has forgotten is that by doing this he will harden the opposition; and that will be of far more value to us, politically speaking, in the future.
If I may say a kind word about the Chancellor, I do welcome what has happened over Entertainments Duty. It would have been very difficult, looking back over the last few months, to have done anything less than what the Chancellor has done, but I am wondering whether all the considerations on Entertainments Duty are considerations of the owner of the cinema or the theatre, or whether the concession will result even in a little rebate in the price of seats to the customer. I would have thought that part of this concession might be used for lowering theatre and cinema prices to the customer, because I am not certain that Entertainments Duty is the only disincentive to people going to such places. There are all sorts of other reasons. One of the main reasons is that general costs have risen so much that there is so little left for many people to be able to afford to go to the cinema as much as they would like.

Mr. John Rankin: I thank my hon. Friend for giving way, but I am sure that, on reflection, he will agree with me that the Chancellor has done nothing for the cinemas, because every penny that he is giving of this £6½ million is coming from the television viewer, who is to be mulcted to the extent of £8 million.

Mr. Cherwynd: I am grateful to my on. Friend for anticipating my very next point.
I do not think the Chancellor is justified in putting an extra £1 on the television licence so as to be able to give something away to the cinemas. I do not think

that he can argue that it is the competition of television that has put the cinemas, in difficulties. We have to judge the cinema as a separate item and this £1 increase will be a very severe blow to a great many people.
I should like to ask the Financial Secretary to the Treasury, on this point, whether some means may be found whereby the old-age pensioner, for instance, can be relieved of this extra £1. It is no good the hon. Gentleman saying that he has the interests of these people at heart, and that he knows they are in a difficult position, while, at the same time, imposing this extra tax. Of course, old-age pensioners have television sets. They have them on the "never-never" system, and, therefore, the extra £1 will make all the difference. I hope that the hon. Gentleman will give serious consideration to removing this extra charge as far as old-age pensioners are concerned.
In Purchase Tax, as has been rightly pointed out, the Government are giving back only half of what they put on before. I should have thought that there was a clear case for taking everything off the Purchase Tax at this time rather than devoting the bulk of the Chancellor's give-away to the Surtax payers.
The Chancellor could have made a move in lowering the age of entitlement to post-war credits. This would have benefited many of the people who write to us almost weekly asking for relief on hardship grounds. Day in, day out, the Treasury says that it cannot devise a scheme that would be workable. These are the kind of considerations which should have been given in the Budget by a realistic Chancellor of the Exchequer. The Budget pinpoints the fundamental difference between the two political parties. I believe that it is an immoral Budget, because it offends against all our concepts of social justice.

8.1 p.m.

Mr. Robert Crouch: I should like, first, to congratulate my right hon. Friend the Chancellor of the Exchequer upon the way in which he introduced his Budget and the excellent Budget that it is. I was not disappointed in what he did—

Mr. Rankin: The hon. Member ought to be disappointed.

Mr. Crouch: —because I have known my right hon. Friend over a number of years and I always felt that when the time came for him to take up high office he would meet his responsibilities and take his duties as seriously as any of his predecessors have done.
It does not surprise me in the least that there have been criticisms from hon. Members opposite. If they have not had much confidence in the Government during the last 12 months, the country has. [HON. MEMBERS: "Oh."] Oh, yes. The Chancellor said that personal savings had increased by £100 million. It is the people of the country and the small savers who matter. Had they no confidence in the Government, we would have seen a reduction instead of an increase in savings.
Another point made by my right hon. Friend was the necessity to increase exports. We are all agreed on that. The co-operation of both employer and employee is needed, because the export market gets increasingly difficult. During the last two years, I have had the opportunity to visit the majority of the countries of the Middle East and I have always been pleased with the demand that there is for British exports. Unfortunately, however, on many occasions we do not get the orders because our prices are too high.
I was very impressed indeed, when in Israel at the beginning of this year, to see the way in which that country is dealing with certain forms of manufacture. The Israelis are not concerned about restrictive practices. What they are concerned about is turning out goods for which the factory is laid out and selling them against us in the Middle East.

Mr. Cyril Bence: Sweated labour.

Mr. Crouch: Not in Israel. We must get together, employer and employee, and ensure that we get our exports into the markets where our goods are badly needed.
We are all, on both sides, pleased with the announcement by the Chancellor of the removal of Entertainments Duty from the live theatre and from sport. A great deal was said by the hon. Member for Stockton-on-Tees (Mr. Chetwynd) about the tax on the cinema. Coming from a rural area, I am pleased to think that

the population figure has been raised from 2,000 to 3,000 to enable certain places to come into a lower tax group. In a constituency like mine, comprising eight local authorities, two of which are boroughs, the existing law has reacted unfairly for a number of years.

Mr. Shurmer: I think that the hon. Member is making a mistake. There was no tax at all on the small areas with a population of 2,000. The limit has now gone up to 3,000.

Mr. Crouch: Oh, yes, we have been paying tax. Some of these small but ancient boroughs will benefit very much indeed.
What will be welcomed throughout the country, in spite of what hon. Members may have said to the contrary, is the reduction in Purchase Tax on so many items. It will be welcomed by the people as a whole as the most pleasing feature of the Budget.
There is another direction in which there is no doubt that millions will benefit. Two hours and five minutes ago, people began to benefit by the reduction of Is. in the duty on petrol. This will be of benefit to millions of people working in our factories. I shall benefit—we will all benefit—to the extent of Is. a gallon.
I must now declare a personal interest. I welcome the concession that the Chancellor has given to those of us who have children. I have three. The youngest was 14 yesterday and the other will be 17 in a few months' time, before the Finance Bill becomes law. Hence I declare my interest and I thank my right hon. Friend for that concession.

Mr. Rankin: The hon. Member should have half a dozen children.

Mr. Crouch: I could not afford them.
On behalf of a large number of my constituents, I welcome the increase to £250 and £400 in the allowances for people who reach the age of 65.
My right hon. Friend said that the duty from motor transport will go up by £2 million. He did not explain how this figure is arrived at, but presumably it will be as the result of more motor vehicles going on the roads. He went on to say that he would permit the Transport Commission to have £50 million more to develop the railways. While I


believe that the railways must be modernised, something must also be done to assist road transport, which is an important part of our communications, by improving the roads.
Something should be done, too, to assist road transport by relieving the Purchase Tax on chassis. Is it generally realised that road transport operators pay 23 per cent. of the tax on petrol and oil, yet account for only 14 per cent. of the country's consumption? A concession should be given on chassis, which at present carry tax of 33⅓ per cent. It is neither fair nor just that an efficient form of transport should be continually penalised as against nationalised transport. None of us objects to fair competition, but this is rather unfair.
I do not for one moment think that my right hon. Friend will be any different to any of his predecessors. He has something in the "kitty", something which he is prepared to give away. All Chancellors do that. It is by their concessions that many of them gain popularity. I have a plea to make to my right hon. Friend. When the time comes for us to discuss the Finance Bill, I hope that my right hon. Friend will bear in mind that British Railways are to benefit by £50 million and that he should do something about the iniquitous 33⅓ per cent. tax on motor chassis.

8.10 p.m.

Mr. Joseph Slater: After listening to the speeches made so far in the debate, I naturally expected the hon. Member for Dorset, North (Mr. Crouch) to make some claim on the Chancellor on behalf of the industry of which he has so much knowledge, but the hon. Member never gave a thought to the farm labourers who are the basis of that industry, and he never considered how the Budget will affect them in the course of this financial year.
In the recent past we have had two Chancellors, one of whom told us that he sought to give us an incentive Budget and the other who said that he was giving us a standstill Budget. On this occasion, the present Chancellor says that this is a progress Budget, but after looking at the policies pursued by the Government during the last year we cannot fail to

notice that to solve the internal and external problems of the country they have intensified measures that had already failed to improve the situation in 1955. They have increased the Bank Rate and they have intensified the credit squeeze. Hire-purchase restrictions have been made more severe and housing subsidies have been reduced or abolished, with the result that in the past twelve months life has been made more difficult for the less fortunate.
Chancellors in the past have made urgent appeals for increased production. That appeal has been made again today. I do not dissent from such an appeal. I fully realise that it is vital to the economy and that, irrespective of party, we ought to do everything we can to that end. I ask the Financial Secretary to the Treasury what incentives the Chancellor and the Government have provided for that purpose. They have done nothing. They have merely followed the old Tory rule in seeking to lower the standards of our people instead of improving them.
I know that it has been said in some quarters that the cost of living went up by only 3 per cent. in the past twelve months and that there is nothing for us to worry about. Those who use that kind of argument forget that the cost of living did not stop at that point and that the index does not tell the whole story, because measures such as the Rent Bill and the increased charges placed on parents with children at school, by way of more costly school meals, and other impositions have further increased the cost of living. With the failure of output to rise, consumption has remained at approximately the same level as it did in 1955, and unemployment has been on the increase. The number of people who are working on short time has increased. Time and again we have been told by the Government that there were more vacancies than there were people to fill them, but is that the case today? As more men come on to the labour market, were is also a falling-off in overtime in industry.
I have never favoured overtime. I have always believed that a man's working conditions should be such that he should not have to depend on working overtime in order to live, but up to the moment we have not reached that position. What do


the Government intend to do to offset the rise in unemployment that is now taking place? Arguments put on this side of the Committee on more than one occasion have offered the Government a solution to this problem, provided that they were prepared to accept the advice which my hon. and right hon. Friends have offered even within recent weeks. I refer particularly to the appeal for a greater concentration on East-West trade. It is no use our allowing ourselves to be fobbed off by America or anyone else in this respect. Unless we take the initiative the day will come when we shall have reason to regret not having acted sooner.
Rapid changes are in progress throughout the world, and backward countries are coming into their own. They are no longer prepared to live in the past. They are looking forward to the future. We ought to encourage them. As their markets are being opened, we, in the interests of good association with these people, should enter those markets. I shall be very interested to hear what the President of the Board of Trade has to say on this subject, if he takes part in the debate.
Last year was a year when national output remained stationary. The tragedy is that while we have been suffering from the effects of the lopsided policies pursued by the Government, the economies of other countries in Western Europe and the United States have shown considerable progress. In February this year the Chancellor announced cuts in welfare subsidies and an increase in National Insurance contributions. He expected to save on this account about £57 million in a full year and £37 million in 1957–58.
We were also told that from 1st April the price of welfare milk was to be increased from l½d. to 4d. a pint, and that there was to be a corresponding increase in the price of National dried milk. The cost of school meals was also to be increased. The Exchequer was expected to save £40 million on welfare milk alone and £3½ million on school meals. The increase of 10d. in the National Insurance stamp was estimated to bring in a further £6 million in a full year from the employed. The argument for those increases has been the increase in the cost of running the various social services. That has been said in particular with reference to the National Health Service. What did the Guillebaud Committee say? It

showed decisively that the cost of our Health Service as a proportion of the national income has been decreasing, not increasing.
The Chancellor said that he has £100 million to distribute. I am of the opinion that some consideration ought to have been given to the charges which this Government are responsible for imposing upon many of our people who have to depend upon the National Health Service. I realise that appealing to the Government to reduce many of the present charges is like beating the wind, but there is nothing to stop the Government from reducing, or abolishing altogether, some of the charges which are hurting many people.
The policy of the Government has been to ask for a standstill on applications for wage increases. I ask the Government how they expect to achieve a standstill in respect of such applications so long as they pursue policies which impose increased charges upon wage earners? Not only is the wage earner finding that deductions are being made from his wage packet, but he also finds that his dependants are committed to the payments to which I have referred, if they avail themselves of these services.
The debate that we had on old-age pensions on 25th February did not please the old-age pension community, particularly the speech made by the hon. Lady the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance. I do not believe that old-age pensioners ask for an increase in their pensions merely for the sake of asking. I believe that the House of Commons has a responsibility to those important sections of our society, the aged, the infirm, the unemployed, and the sick.
The Government have that responsibility just as much as the industrial barons have a responsibility for looking after the interests of their shareholders. Last year, nearly 3,000 large industrial concerns in this country increased their profits by about £170 million over 1955. Even the mild pleas of the Chancellor did not stop dividends from rising by over 10 per cent., whereas wages rose by 7½ per cent.
It is obvious that one industry which escaped the credit squeeze of this Government was the steel industry. Last year,


35 steel companies increased their profits by no less than £30 million, and were able to pay their shareholders a dividend of 23 per cent. more than in 1955. Yet, despite this apparent prosperity, steel prices were raised on 15th December by a sufficient amount to make the steel companies better off by between £40 million and £50 million a year.
It appears to me, therefore, that the steel companies are determined to protect their shareholders from any squeeze by staying one jump ahead of the Government. And just as the shareholders are taken care of by the industrial barons of this country, so I believe it to be the responsibility of the Government to come out positively against the attitude displayed by the Minister of Pensions and National Insurance and his Joint Parliamentary Secretary when we are considering the application for increases in pensions.
Today, those pensioners are repeating their applications to hon. Members. I hope sincerely that the Chancellor will have second thoughts about the £100 million which he has already sought to distribute. If he cannot take the increase from that amount he ought to see whether it is not possible to find some other money which will provide our aged people with an increase of the sum which they are receiving now.

8.25 p.m.

Mr. G. R. Howard (St. Ives): The hon. Member for Sedgefield (Mr. Slater) will, I trust, forgive me if I do not follow him in his criticisms of the Chancellor of the Exchequer. Bearing in mind the tradition of the House to rise early on Budget Day, I will make my contribution brief and will merely commend what the Chancellor has done.
I am sorry that the hon. Member for Holborn and St. Pancras, South (Mrs. L. Jeger) is not in her place. In talking about electric irons she said that we mere men have no use for such things. Perhaps she is right about electric irons, but I can appreciate what the Chancellor has done about kitchen utensils. I am very fond of cooking, and I often help my wife out in that regard and give her a spell off duty.
Although I am pleased about the reduction of Purchase Tax from 30 per cent. to 15 per cent. I hope that next year

my right hon. Friend may consider the question of a sales tax. I know it is unfair to expect him to do so at once, because he has only been in his office three months, and it is a formidable task for anyone to embark upon. I say that for the following reason. Since the Budget speech this afternoon I have telephoned a small trader in my constituency. I asked what the Purchase Tax change would mean to him, and he told me that, so far as he could estimate it would mean, on his turnover, a loss of to him of between £300 and £400.
This is one of the matters which is so unfair in the incidence of Purchase Tax. If it is imposed to stop people from spending, then exactly the same effect could be achieved by having a sales tax, which could be collected from the person buying the goods. That would mean that the small traders would not have to buy goods at a figure containing Purchase Tax at a certain rate and run the risk of a subsequent change in it. I hope, therefore, that something can be considered next year on the lines of a sales tax. Then again, the present arrangement involves a great deal of work for the small trader in having to estimate the varying changes in price of all the different good's in his shop. I hope that in considering that group of Purchase Tax, Group 11, which comprises furniture, hardware, ironmongery, turnery, tableware, etc., we shall see that the benefit is also given to the small craft potters, many of whom are established in rural constituencies. These men are skilled craftsmen in many cases on their own. If they wish to turn out pleasant-looking and useful casserole pots, for instance, I hope that they will benefit from this concession.
I add my words to those of other Members who have said that we all hope for some further concession during the Finance Bill. I hope that the Chancellor will consider the position of the small craft potter, who is carrying on a very useful trade. These craftsmen are doing a fine job and keeping going an old custom which is some cases has passed from father to son for hundreds of years.
When the Chancellor was speaking about credit and the advice which he has given to the banks, I could not help thinking of the difficulties of the small traders in a seaside town, like some in my constituency, who for very many


months of the year do very little trade. They need credit facilities during the winter months, when there are few visitors, as they only do a good trade in the short summer season. If my right hon. Friend could devise some guidance and help for those small traders on the lines devised by the Minister of Agriculture for the farming community, it would be of great assistance in genuine cases of people who have not very much capital behind them.
As one who spent the whole of the last war in the Navy at sea, most of it doing convoy escort duty, I should like to add my congratulations to the Chancellor on what he has done in providing new allowances for shipbuilding. It is only fair to our great merchant fleet that they should get this assistance. My hon. Friend the Member for Tynemouth (Dame Irene Ward) mentioned that the concession will help the men who work in shipbuilding and repairing, but we must also remember that we rely on our own Merchant Navy in an emergency to carry our supplies to us.
It is no use thinking that in an emergency we can rely on people running under flags of convenience—these people with funny flags and some odd standards, as far as one can see. We shall certainly not be able to rely on them. They will not come to our aid except at a large profit to themselves. They will try to soak us with the largest possible charters they can get. The British merchant seaman will come to our aid as they have always done in the past. They are the people who always stand by us so magnificently in time of war.

Mr. Hector Hughes: In making this speech on behalf of the merchant seamen, I hope that the hon. Member will not forget the fishermen who manned the minesweepers during the war.

Mr. Howard: I am sure that the hon. and learned Member would not expect me to forget the fishermen. I have had some experience among them. I see them often; in fact I was with some of them on Saturday morning. There is no one for whom I have greater respect. Indeed, I served with them for many years in the war. In my speech I was thinking in terms of the immense importance of merchant shipping to this country and the immense importance of our

having a large, modern and prosperous merchant fleet to fight the competition of ships running under flags of convenience.
Next, I would say, "Jolly good riddance to the petrol duty". I was delighted to see the Chancellor's action in that respect, which will be a great help to us in the holiday resorts. In many cases it will make all the difference for people with smaller incomes who wish to go on holiday. The family may wish to go by car from the Midlands to west Cornwall, and obviously it will be much cheaper than going by train. I welcome this concession, and others which I hope we shall have in the second rationing period. The sooner we get rid of rationing the better.
Lastly, I add my words of congratulation to the Chancellor for what he has done about Entertainments Duty. I am glad that it has been taken off the living theatre and off sport. Whatever we say about canned entertainment, by which I mean films and television, for example, nothing can possibly replace the live theatre, and many of the repertory companies and companies in small theatres have been struggling against terrible odds because of this duty. Thank goodness it has been abolished. Perhaps that will bring forward new talent in the theatre.
I welcome the raising of the population limit for entertainment tax exemptions from 2,000 to 3,000. The man who really wants help above all others is the small cinema owner, the man running a small cinema which is almost a family concern and which is run by him and his wife. Such men have been suffering the most terrible conditions for several years. I have cited cases and given facts and figures of men who have sustained losses year after year and who have only just been able to carry on for another year. Let us hope that that provision will help them.
In conclusion, while welcoming what the Chancellor has done on the lines that I have indicated, I hope that this will be the first instalment of bold and imaginative steps which will do everything possible to help a large majority of the people of this country.

8.36 p.m.

Mr. John McKay: The tone of the speeches from the benches opposite has not been surprising. It is plain


that this is a class Budget, a Budget determined to try to raise the standing of the Conservative Party by giving reliefs and help to those people who are the party's main support.
One of the Chancellor's main themes was that one of the chief aims of any Government, whatever party is in power, ought to be stability. As with all platitudes, we can all agree with that, but what is important is to know the fundamental things which make for stability. One of those fundamentals is a clear indication that the workers are getting a fair share of the wealth produced.
That is one of the main problems of today. Some hon. Members have referred to shipbuilders and have said that we must ensure that they are helped in every way. What has been the difficulty which shipbuilders have had to meet in the past year? They have not suffered poverty. Have they not returned reasonable dividends? Have they not set aside large accumulations of money for future expansion? Surely, for several years, shipbuilders have done those things, as they have been done in many other industries.
It is largely because that has been the situation, not only in shipbuilding, but in engineering, that we have had agitation from workers for increased wages. The more we read financial papers on these matters, the more we are driven to the conclusion that those papers are arguing that certain changes should be made largely on the ground that workers are building a strong economic position for themselves. However, when the situation is examined, that view is found to be incorrect. It does not tally with the increases in the cost of living and the amount of money which wage earners are getting. It is not true that their economic position has tremendously improved.
Another aim and object on which we ought to insist was mentioned by my hon. Friend the Member for Sedgefield (Mr. Slater). It is that a man should be able to keep his family reasonably without earning overtime by working at weekends. Working overtime is looked upon as something that the workers should be expected to do. We know that they will do it if they cannot feed and clothe their families reasonably merely by working an ordinary week. Whatever money

there is in the pockets of wage earners is entirely due to their working overtime.
Taking any period that we may choose —from 1938 to 1956, in respect of which there are regular index figures—it will be found that it is the business men and financiers who are making the money and feathering their nests. Financiers and employers take the view that, as a class, they are entitled not only to produce the goods and get good dividends but to put aside money, out of the profits accruing to them, to build up an accumulation of wealth in their industries far beyond anything that the ordinary worker can look forward to.
What is the ordinary worker's capital? Can he build up his economic position so that he has three, four or five times as much wealth as he used to have? He cannot. That is his general economic position, and that is the position in which the business people want to keep him. I do not want to spend too much time upon this matter, but I must point out that if there is one thing which stands out above any other in connection with this problem it is the fact that, although workers are now living better than they used to, they are doing so only because they are working overtime.
We are all anxious to help the aged people. We need not go right back to 1956 to appreciate the difficulties that arise. There are two conclusions at which we can arrive. Either we are prepared to prolong the need of the old people and are willing that it should be met entirely through National Assistance, or we would like to modify or radically amend the insurance and pensions schemes. Nearly 1 million people—including the wives and families of the men concerned—have to depend upon these schemes because of sickness and unemployment. We seem to ignore all these members of our community.
Let us consider our position in 1953. Comparing one section of the community with another, how are we dealing with initial allowances? In 1953, the initial allowance for sole traders and partnerships was £10 million and in 1956 it was £19 million, an increase of 90 per cent. In 1953, companies' initial allowance was £112 million rising to £216 million in 1956, an increase of 93 per cent. In the same period, the initial allowances for


farmers rose from £8 million to £14 million, an increase of 75 per cent. and dividends, profit and interest rose from £899 million to £1,245 million, an increase of 38 per cent. General wages showed an increase of 28 per cent. What has been the increase in old-age pensions since 1953?
The Conservative Party made a lot of what they did at the end of 1954 by way of increasing pensions, which were implemented in 1955. The Government raised the rates of pensions for married pensioners from 54s. to 65s., an increase of only 20 per cent. There is no question that something ought to be done for them. People talk about their being able to receive National Assistance. There are very few people with more experience of National Assistance than I have. I have visited houses where, on some occasions, the National Assistance officers have refused to help. I have been ashamed of the conditions of the houses. After my personal visits, the officers had to do something.
National Assistance is, after all, based on a form of means test. It is not easy for these old people to live, as one can well imagine. There comes a time when many of them need clothes and, perhaps, more bedding and a little furniture. The National Assistance officers show as much good will as possible, but we have to do something to change the situation so that many of these old-age pensioners do not have to go to National Assistance for the income which it is necessary that they should have.

8.50 p.m.

Mr. Norman Dodds: I have heard many Budgets presented, but this is the first time that I have stayed after a Budget speech to raise a particular point, which, in this case, I must say that I felt very angry and, at times, dismayed about. Today, the Chancellor spoke for nearly two hours and during all that time he did not make a single reference to the millions of poor, old-age pensioners. I should have thought that at least he would have had the decency to mention their plight, which I think hon. Members on both sides of the Committee recognise.
I was shocked at the callousness of the Chancellor today. He must have known that up and down the country petitions are being prepared. Many have already

been handed to Members of Parliament, to be presented in the House. I protest that the Chancellor, who, today, gave away more than £100 million, has not given one penny piece to millions of the poorest in the community. The hon. Lady the Member for Tynemouth (Dame Irene Ward) said that the Budget was imaginative. With her, I was pleased that some old people living on small incomes will get some tax concession, but what about those whose incomes are well below anything that will be affected by that concession?
I well remember that during the Christmas Recess I spoke at a great demonstration of old-age pensioners in Crayford Town Hall, in Kent. On that occasion the news sheet of the National Federation of Old-Age Pensions Associations had a report on its front page describing how a deputation from the executive of that Federation had seen the present Minister of Pensions and National Insurance. The Federation believed that from that visit there would result an increase in pension, and the amount which was mentioned was 5s. It was really pathetic to see some of the old people who had already earmarked those few shillings and decided how to spend them.
During the past week I have been handed from many branches of the Federation thousands of signatures to a petition. The petition reads:
 We, your constituents, whose names and addresses appear below, ask for your help in bringing to the notice of the Government the great poverty now being endured by the old-age pensioners of this country. As the cost of living is constantly rising, the basic pension remains static. It is quite obvious that pensioners are getting worse off all the time; they cannot buy even the bare necessities of life, such as food, fuel or clothing.
It must be obvious to any hon. Member who has any contact whatsoever with old people that that is a fact.
I wish to point out that when the last increases were made in old-age pensions and National Assistance those increases were largely because of the increased cost of living which had come about earlier. Tonight, I am convinced that there will be millions of old people who will be intensely miserable, because I am sure that they had a right to expect that if anything was to be given away today they, of all people, would at least get something.
I repeat what I said at the beginning of my speech. I really do not understand how the Chancellor, in his long speech, could not even express regret that he could not at this time give the old-age pensioners an increase. Therefore, although wanting to say a lot more, on their behalf—at least, on behalf of thousands in my constituency—I merely express my disgust that, in giving £100 million away, these poor old people should have been completely forgotten and not even have had a word of sympathy from the Chancellor of the Exchequer.

8.55 p.m.

Mr. John Rankin: In his Budget speech the Chancellor said that he had decided to give a 40 per cent. building allowance to the shipbuilding industry. As that is one of the principal industries in my constituency—

The Financial Secretary to the Treasury (Mr. J. Enoch Powell): That is not so. It is an investment allowance to the shipping industry.

Mr. Rankin: I am very sorry. I misunderstood what the Chancellor said. Two hon. Gentlemen opposite who have spoken shared that misconception. I must withdraw a welcome which I was prepared to give to something which I thought would be of some interest to my division.
I should, however, like to draw the attention of the Financial Secetary to a constituency point which is of interest to a great many people in the engineering industry. Howden's, a well-known engineering firm, expanded after the war into the manufacture of steel furniture, particularly steel desks. They have a grievance that steel desks manufactured for domestic use and export have to carry 30 per cent. Purchase Tax in the home market. They feel that this is unfair because wooden desks manufactured for exactly the same purpose have only 5 per cent. Purchase Tax.
They believe that in such discrimination a serious injustice is being done to the manufacturers of steel desks in particular and steel furniture in general. They do not want the 5 per cent. tax on wooden desks to be increased, but feel that Purchase Tax levied upon their own products might be reduced nearer to the 5 per cent. borne by similar products in

wood. I will not pursue the matter any further now, but the hon. Gentleman will hear a great deal more about it in Committee.
The Chancellor said today, "The truth is that we have all been trying to take more out of the economy than we put into it". I will take that as a text for the main part of my speech. The Chancellor would do the community a great service if he had those words framed in letters of gilt and hung in the Stock Exchange, in some of the "posh" hotels in the West End and in the offices of speculators and other sections of the community who put nothing into the economy but draw out of it far more than they ought.
I say that because, in page 37 of the Economic Survey, the Government, dealing with the prospects for the United Kingdom in the coming year, put special emphasis on the need
… to start to build up the reserves to a point at which they are strong enough to take in their stride a temporary reverse such as they have recently suffered.
The Survey goes on to say that
 We will have to earn more in order to pay for the increased imports which will be needed when the expansion of industrial production is resumed and to compensate for the reduction in net oil earnings that must result from the closing of the Suez Canal.
In addition, we have to face the drawing of 561 million dollars from the International Monetary Fund, which means that
… even if the terms of trade should improve slightly, exports must be increased more rapidly than in recent years …
The Survey further emphasises that
 Our prospects … depend mainly on our success in the expansion of exports.
Throughout those closing paragraphs the Government are insisting on the need for building up our export trade. With that, of course, all of us on this side are in complete agreement. We want to encourage exports, and we are glad that the Government are emphasising that need. But we do not want unduly to check imports. We do not want to restrain consumption, because, as the Chancellor himself pointed out, the demand must be there if consumption is to be increased.
To a large extent the Chancellor is altering the policy which has been pursued during the last year. According


to the Survey, there will be an attempt to increase production, which was deliberately checked by the Government as an act of policy. That brings me to a matter which I raised yesterday in the House. The Government are emphasising the need for increased exports, and hon. Gentlemen opposite have asked why we are not developing such markets as the North American and Commonwealth markets.
I have no objection to these things being done, but why are we not developing the China market? Here we have one of the greatest markets in the world: a population of 600 million; a Government—as I know personally from contact with their Minister of Trade and Commerce—anxious to trade with us; a Government who are heaping up balances in Hong Kong, and who are entering into trading agreements with many nations in the Far East and Middle East. Yet we, who are expounding the need for exports, have for years been ignoring the fact that in the Far East we have the biggest market in the whole world. Yet, because we are tied to America's coat tails, we are unable to develop it.
It seems strange that when we have produced the H-bomb, which we are to test in a few weeks and defend on the ground that by its possession we will be able to have a foreign policy of our own, we should still leave our trading policy in the foreign field as a sort of guided missile in American hands. I hope that before the Budget debate comes to an end we shall hear from the Government something about the development of our trade with China.
To achieve the purpose which he has expressed, the Chancellor has produced what I suppose he would call an incentive Budget. The query which occurs to me at once is: for whom is the Budget an incentive? One might say that the £24 million to be taken off Purchase Tax will help the ordinary person; but it will help him only once, because, as was pointed out, the concession applies to those types of goods which most people buy very infrequently, or perhaps only once. The children's allowances are only a small affair and so, too, is the over-65 allowance, welcome though it is.
We are all pleased that the aged single person will be exempt from tax up to £250 income and the married couple will

be exempt up to £400. But the scandal is that this decision in respect of the aged completely ignores the 1 million old-age pensioners who get absolutely nothing whatever from this Budget. It is really shocking. They might at least have had some hope given to them. It would not have been hard for the Chancellor to have said that now he is exempting altogether from tax the person who has £5 per week for pension or the married couple having nearly £8 per week, he was thinking also of doing something for the one who has only £2 per week, as so many have. This is one of the gross injustices which lie in the Budget, that these million persons receive in this "incentive" Budget not even a kindly nod from the Chancellor.
I should imagine that at the most the amount which will filter through to the working person from the Budget will scarcely reach £30 million. This is a class Budget. If we look at the other class, what do we find? The allowance of £17½ million which is to be given in respect of children who remain at school will go mostly to those who are able to keep their children at private schools and ordinary secondary schools up to 17 and 18 years of age. They form a not particularly large section of the community.
Surtax relief will bring a total of £34 million to an even better off class, and these two groups alone will command £51 million of the £100 million which the Chancellor is giving away. We have to remember that these Surtax payers who are to get £24½ million from earned income relief, an amount equal to all that is being distributed over the entire community in Purchase Tax remission, represent not more than 700,000 people altogether, yet they get £24 million distributed among them.
The person with £10,000 a year will, under this Budget, get a relief of £600 a year, but the person with £2 per week as his total living wage will not get a brass farthing. That, I suppose, is part of what the Tories call an incentive Budget, and a just allocation of the resources which they are asking the whole community to try to increase. We have a different name for it, but as it is not very polite we will reserve it for a private occasion.
I should like to say a word or two about another relief which has been


granted—the relief of £6½ million to the cinema exhibitors. That is claimed as something which the Chancellor has done to benefit the industry, but, of course, the fact is that the Chancellor has given nothing at all. He is taking £8 million from the television viewer, giving £6½ million of it to the cinema industry, and so making a profit on the transaction He is gaining £1 million of income, and, at the same time, getting the credit for giving away £6½ million.
It is an easy thing to do—give away money which he takes from others; but out of the £6½ million that he surrenders the levy consumes £3¾ million, so that if we take off the levy—and we should remember that the amount that is being given to the industry was to help it with the levy payment—if we take the £3¾ million from the £6¾ million, the benefit to the industry, as I see it, is to be £2¾million, and, to meet that, the Chancellor is taking £8 million from the television viewer.
It is grossly unfair that he is putting a tax on television, which, as one of my hon. Friends said earlier, is not in competion with the cinema at all. Television is appealing more and more to an older type of audience, and will not subtract from the cinema audiences. The big combines in the cinema industry recognise that, and they are bringing their industry into line to fit in with a smaller viewing public. They are adapting themselves to a viewing public of about 20 million per week, because they realise that the marginal audience will hive off and become largely a television audience. I hope that the Financial Secretary will take note of the figures I give, because, later, we will need to get an exact idea of how the £6 million is to be distributed.
Take the case of a Is. 3d. seat. The Chancellor said today that 11d. of the 1s. 3d. would be free of tax and that the remaining 4d. will be shared with the exhibitor on a fifty-fifty basis, so that the tax collects 2d. and the exhibitor gets 2d. Does that mean that the 2d. includes the amount which is charged to the levy? In the case of the 1s. 6d. seat, there will be 3¾d. for tax and 3½d. for the exhibitor. Will the 3½d. which the exhibitor has to pay include the Entertainments Duty and also the levy which is to be imposed by the Bill now in another place? These

points are not clear and I trust that the Financial Secretary is paying attention, so that during the Committee stage of the Finance Bill we will have a clear statement of the Chancellor's intention concerning the levy. Is the levy payment covered by the £6½ million which, he says, will go to the industry?
The Chancellor today appealed for an all-out effort to promote the exports by which the nation lives. We hope that he will get that effort, but one thing that must be made clear is that if he is to get it he will have to have a copper or two in the "kitty," so that, during the Committee stage of the Finance Bill, we may manage to obtain for the working class a better share of their own product than is coming to them so far through the Budget.

9.17 p.m.

Dr. Donald Johnson: I wish to express my appreciation of the Chancellor's Budget proposals. I have to confess to a certain personal interest. It so happens that I am doubly interested, in that in the year when I hope to reach the age of 65, my youngest child will become 12 years of age, and I shall have another older child to support also. That, however, is talking merely of the future. Instead, I should like to say something more of the present on behalf of my constituency of Carlisle.
Carlisle is an isolated place 55 or 60 miles from the nearest big centre of population. This means that the local entertainment industry is of particular importance to us. On that account particularly, we appreciate the remissions of tax which have been announced this afternoon. We have had attempts to provide a live theatre which, it is no exaggeration to say, have been crippled by taxation. The remission will, perhaps, give us the opportunity to have a live theatre occasionally or, possibly, even to keep one going permanently. We have a limited number of cinemas and we have a football team. These sum up the main popular entertainments in our rather isolated city.
One of our very limited number of cinemas has already closed as a result of the effect of Entertainments Duty. Therefore, we greatly appreciate this remission. More important still, we appreciate the remission on account of our football team which has been in very dire straits in


recent years. Like many of the Third Division teams, its existence was being threatened by the recent incidence of Entertainments Duty.
The team's balance sheets for the past three seasons illustrate the sort of thing from which it has now been saved. In 1954–55 the team showed a slight profit, entirely due to the transfer fees from the sale of its best players, which, of course, was mortgaging the team's future. In 1955–56, which was an average year, the team lost several thousand pounds. In 1956–57, which has been a particularly good year through the windfall of cup ties against First Division teams, as much as £4,200 has been paid in Entertainments Duty. Even with that windfall, I understood that the team would do no more than just about break even.
It was quite clear that with taxation of that character the team, which is of great importance in keeping up the morale of a city like Carlisle, faced a very poor future indeed. Now, with the present remission, our local entertainment industry, including the football club and the cinemas, can look ahead to a future which will be entirely different. I am sure that not only those concerned but the whole population of the city will be grateful to my right hon. Friend.
I should like to express my appreciation on more general lines of my right hon. Friend's remission of taxation in the higher brackets, not through any personal interest but because I think that he is giving our young people an incentive not only to work, but, what is more important, to work and stay at home and give their gifts and talents to the country of their birth.
We have rightly devoted a great deal of debate and thought to the question of technical education. Great proposals have recently been put forward for technical colleges and universities to keep pace with our competitors across the Atlantic and in Soviet Russia so that we can train more of our young people in the technical skills necessary to keep us abreast of the times as a modern nation. But what has been the use of educating our young people and of spending this money on technical schools merely to have them emigrate to Canada and the United States because they felt that, once they were qualified,

there were better openings for their skills there, and a better future, with the perfectly proper incentive of considerably higher incomes than they could earn in this country? These tax remissions, which have quite properly started as remissions for people with family and other responsibilities, will be an incentive to our young people to stay in this country. First, there will be the incentive to a technical career and, secondly, there will be an even more important incentive—to use their skill here instead of having to emigrate in order to get the benefit of their training.
It is that principally which has given so many of us on this side of the Committee the feeling, which I am sure will be shared by hon. Members opposite and by people throughout the country, that we are at the beginning of a new era of incentive and opportunity. That is the reason why the proposals of my right hon. Friend have my fullest support.

9.27 p.m.

Mr. Edward Short(Newcastle-upon-Tyne, Central): The hon. Member for Carlisle (Dr. D. Johnson) has spoken about his constituency. I know Carlisle very well and I know many people there. The hon. Gentleman talked about the football team, the cinemas, the theatre, and the higher income levels, but he did not say a word about the old people, the most needy of his constituents. Not a word could he spare for them in his congratulations to the Chancellor of the Exchequer. I have risen tonight simply to add my voice to the almost universal protests on this side of the Committee, that in a Budget in which over £100 million is given away not one penny has been given to the greater part of the old-age pensioners, because it is clear that the Income Tax concession will not affect by far the greater part of them.
This Budget will go down into history as the shameful Budget; the Budget when well over £100 million was distributed but not one penny went to the most needy section of the community. I should not have intervened in this debate had I not felt so deeply about this. Last night I attended a rally of old people in my constituency where there were between 400 and 500 present in their sixties, seventies and eighties. I spoke to them and I collected petition forms. I have given those


to the Chancellor, and so he has received petitions signed by many hundreds of thousands of old people.
Towards the end of his speech today the Chancellor enumerated his proposals and referred to representations that he had received from businessmen, cinema owners and many others. In many cases he was meeting their requests. Yet he had received petitions from hundreds of thousands of old people, the really depressed section of the community, and not a word did he say about them. That is why I think this Budget will go down into history as the shameful Budget.
After the meeting last night my old people gathered around and talked to me. I questioned them about their own personal budgets. I was shocked to find that some of them were spending between 60 per cent. and 65 per cent. of their income on food. Just imagine that. I believe that the retail index allows for 35 per cent. being spent on food, but in discussing the needs of old-age pensioners the index has very little relevance; they spend not 35 per cent. but very nearly double that figure. One old lady said to me, "If it were not for the help I get from one or two of my children I should often go hungry."
That shocked me and made me feel ill. It is shocking that in this great rich industrial community of Britain an old lady should be able to say, "If it were not for my children I should often go hungry". This year we are spending £1½ million on the Royal family, and yet we have people in the country who can say "If it were not for my children I should go hungry". What a disgrace to a modern community that that sort of thing should happen.
These old people have been passed over in the Budget in order to help the £2,000-a-year-plus class. That class are not all able young executives about whom we are always reading in the Daily Express. Many of them belong to the spiv class, the "smart alecs" who have done well in the post-war period. They are the people who are being helped, too. There are genuine young men who want to get on in industry, but I have never accepted the argument that taxation at that level is a disincentive. To argue that there are no opportunities in this country of ours, in this great industrial community, is a

lot of nonsense. There are tremendous opportunities for young men who have guts and courage and the will and ability to go ahead in industry. This sort of help to them is not necessary.
Another factor which we must remember about these people is that they are all trained at the expense of the State nowadays. They do not have the long, expensive educations which they used to have. They are all—doctors, executives, lawyers, teachers, even Ministers—trained at the expense of the State.
We have heard today that £17 million has been allocated from the Budget in order to apply the earned income levels to the Surtax payer, yet nothing at all has been provided to increase the miserable pittance of the old people. I feel that it is a disgrace to a modern community that after a man—or woman—has given his life to the service of the community he should, when he stops work, be placed for the remaining years of his life on the subsistence level. There is something wrong with a society which allows that to happen.
In our working lives we do not work just to earn money. The men who build ships do not use the ships; they are for the use of the community. Our work is a service to the community, and I believe that it ought to be part of the social contract between the worker and the community of which he is a part that when he has finished his work his standard of living will be maintained. Speaking for myself, I believe that it ought not to be regarded as insurance; the old-age pension should be taken out of insurance altogether and should be provided for in the Budget. It is wrong that it should be looked upon as insurance.

Mr. Frank Allaun: Like war pensions.

Mr. Short: As my hon. Friend said, war pensions are an example. I repeat that that should be envisaged as part of a social contract between the members of the community and the community itself.
In the Budget this year we have begun to see the first effects of the great changes which are occurring in defence. Over the next five or six years there will be some very large savings on defence. I have read the White Paper carefully, but I should not like to hazard how much the


saving will be. It must be quite plain that we shall not need navies in the future or the greater part of what at present we regard as an Air Force; we shall need no fighters and very few bombers, and we shall need very small ground armies in the Armed Forces. By 1960 we shall be saving perhaps £600 million or £700 million a year, compared with what we spend now. We have seen the first savings this year.
How is that great saving on defence to be used? If this Budget is any indication, that saving will go not to that section of the community which needs it most, but to the better-off section of the community. Does the hon. Member for Galloway (Mr. Mackie) wish to interrupt?

Mr. John Mackie: Yes. Certainly some concessions have been given. The hon. Member ought not to anticipate greater concessions being given hereafter.

Mr. Short: Can the hon. Gentleman tell me what concessions have been given to the ordinary old-age pensioner who is getting national assistance?

Mr. Mackie: No, not on the spur of the moment. The hon. Member was here during the Chancellor's statement and I am sure that he will read, mark, and inwardly digest what the Chancellor said.

Mr. Short: The answer is "None". There were no concessions at all, except that that pensioner's pots and pans will be cheaper. There is nothing else. The Government put Purchase Tax on pots and pans. Its removal is the only help to old-age pensioners.

Mr. Mackie: What about Income Tax reliefs?

Mr. Short: Is the hon. Member so out of touch that he imagines that old-age pensioners getting National Assistance pay Income Tax? What a commentary on the other side of the Committee that an hon. Member should make a comment like that.
The point that I was making was that in the next few years we shall save hundreds of millions of pounds in our Defence Estimates. I suggest that the greater part of that should be diverted to that section of the community where the greatest poverty remains. After all,

old people represent a sector where the last citadel of poverty in this country remains. This immoral Government— and surely a Government which when it has £100 million to distribute can show so blatant and callous a disregard for the most needy section of the community is an immoral Government—has passed them over. The Financial Secretary to the Treasury smiles. The Chancellor did not use the phrase "old-age pensioner" or "retirement pensioner" in any section of his two-hour speech. The Government have shown such disregard for those people, have passed them over to give bonuses to the men who get £2,000 to £10,000 a year, that they ought to be utterly rejected by the community.
On behalf of the old people in my constituency, I want to say that I am shocked and disgusted that nothing has been done for them in this Budget. If the Government had the guts to go to the country now, they would be absolutely rejected by the electors.

9.40 p.m.

Mr. A. S. Moody: I was one of those who came to the House today thinking that there would be a distribution of a surplus and hoping that that distribution would be based on the needs of the needy, but as the Budget speech unfolded, it seemed to me that the surplus was to be given to pampering the greedy, rather than to the needs of the needy. I have very mixed feelings about the whole set-up. I can understand hon. Members opposite congratulating the Chancellor, for although he has been in office for only about three months, he has very clearly found what an unholy mess his two predecessors made of the job, and he has taken some corrective action to try to redeem their failures. The right hon. Gentleman the present Lord Privy Seal taxed pots and pans, but the Government have now found that that was just nonsense and that tax has been removed.
Hon. Members on this side of the Committee have pleaded against Purchase Tax, especially in regard to the furnishing industry. In my area the furnishing trade has slumped very severely because of the credit squeeze. Many firms have changed over from overtime to short-time working, and many people have left the industry because they could see no hope in its future. The trade union which


caters for the furnishing trade reports the loss of a considerable number of craftsmen, who will never return to the industry.
All the other concessions are simply adjustments in respect of past Tory failures. After the damage has been done to the furnishing trade the Government decide to make some concessions. These should have been made three years ago, or the duties should never have been put on in the first place. We are grateful that at last the Chancellor has given way to representations from all sides in regard to the tax upon the living theatre, but in any case it was a tax which looked like disappearing. Some of the old theatres, which have been of great educational and entertainment value for many years, have had to close down. As we come to this House by omnibus we may pass the Stoll Theatre, which has had to close because of the penal Entertainments Duty imposed upon the living theatre. When the damage has largely been done and the tax has therefore almost disappeared, the Chancellor decides to take it off altogether.
The same story can be told in respect of sport, and in regard to Third Division football in particular. Last week at the First Division match at Birmingham there was an attendance of just over 6,000 people. Birmingham usually has an attendance of from 25,000 to 30,000. I believe that it is merely because of the fall in revenue from sport that the Chancellor has decided to ease the tax.
To take the burden of tax from the living theatre and place it upon persons who own television sets is not fair. Many working men and old people have scraped and saved upon the monthly instalment system in order to purchase television sets. They paid a good price for them, and a good part of that went in Purchase Tax. A television set is not cheap to buy, and a licence fee of £3 a year is plenty to have to pay. It is an imposition to impose an extra £1.
If the B.B.C. is being run at too high a cost there are better ways of dealing with the matter. We have only to think of the salaries paid for a half-hour appearance on "What's My Line?", where the same stock questions are asked every week, or to read the contracts made

with artistes who are paid first-class salaries to take part in second-class programmes and who very often give third-class performances. If the television service is not paying its way the Government should have looked in the direction of making cuts in the ways I have mentioned rather than have imposed an extra £1 upon the licence fee and, therefore, an extra burden upon the people who have bought their sets with difficulty and have a struggle to maintain them.
What shocks me most of all are tie omissions from the Budget. Thieving from the Road Fund was mentioned casually this afternoon. Surely it was not beyond the wit of the Chancellor to promise that in the near future he would produce an imaginative scheme for the development of British roads.
There is also, as my hon. Friend the Member for Wallsend (Mr. McKay) has told us, the question of the old folk. The Chancellor knows, and the Minister of Pensions and National Insurance knows, that during the last two months old-age pensioners' organisations all over the country have held mass meetings which have been about the best attended meetings held in this country for a long while. The poor old people have gone around and obtained literally millions of signatures; they have made their final great effort, really believing and expecting that after what they had been promised in interviews with the Minister of Pensions and National Insurance they would get some substantial consideration in this Budget. But the Budget contains no mention of them. This Budget is a failure because it gives exactly nothing to the mass of the workers of this country.
The Budget may please hon. Members opposite because it brings relief to the people with whom they mostly associate but who are not what we would regard as needy people. The Budget has neglected the needy and pampered the cause of the greedy. It is lacking in soul, in imagination and in the spirit of generosity. It is those in distress who have the right to expect help from any responsible Government. Therefore, I say that the Government should go to the country, if they are so convinced of their greatness, and give to those people whom once again they have cheated an opportunity to pass judgment upon them.

9.47 p.m.

Mr. John Mackie: I listened with very great interest to the impassioned speech of the hon. Member for Gateshead, East (Mr. Moody), but before I deal with anything that has been said by hon. Members opposite may I say that I listened with very great interest and, on the whole, with general agreement to the speech of the Chancellor of the Exchequer this afternoon?
In his preliminary remarks, before he came to any question of tax relief or what he was about to do for this, that or the middle section of the community, my right hon. Friend made great play— if that is not too flippant a phrase to use —with the fact that the credit squeeze was to be maintained in full severity. I should like to enter this mild caveat that I would hope that before another Budget comes round—and I quite agree that he has been in difficulty with the bankers, as he told us himself—he will realise that with regard to certain industries, particularly the industry with which Scotland is most concerned, agriculture, the credit squeeze has had certain bad results.
It has resulted, particularly so far as some of the smaller farmers are concerned, in their not being able to develop their farms or agricultural enterprises as fully as they would have wished. I quite realise that in the present economy there is no desire by the Government or the powers that be that certain branches of the agricultural industry should be, to use an old-fashioned phrase, hyper-trophied. At the same time, I do not think that the Chancellor or those of us associated with him would wish to penalise, so far as the banks are concerned, those farmers who are just "pegging their way" in the industry and on their own farms, in the purchase of further mechanical devices. The ordinary farmer who is credit-worthy should be granted the accommodation he desires. I am perfectly certain that that is the case with dairy farmers and, to a certain extent, sheep farmers, in southern Scotland.
I welcome the Budget generally, I think the speeches of hon. Members opposite, particularly in the earlier stages of this debate, have proved that they are somewhat disappointed that the Chancellor has gone so far as he has gone in giving

certain concessions, especially to theatres and cinemas.

Mr. Short: There was an all-party Motion about the live theatre which was signed by as many right hon. and hon. Members on this side of the Committee as right hon. and hon. Members opposite.

Mr. Mackie: Certainly, but I am glad to think that we are on a party basis and have not a Coalition Government, although no doubt hon. Members opposite would welcome being called into a coalition as they realise that their chances of success at the next General Election are diminishing day by day. I can quite understand the interruption of the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short). Suggestions were made by the hon. Member for Gateshead, East, for whom I have a great respect, that the allowances, or concessions— whichever word we like to use—to old folk were completely inadequate. I do not for a moment agree in that respect

Mr. Short: Tell us what they are.

Mr. Mackie: This is a first instalment.

Mr. Short: Tell us what it is.

Mr. Mackie: The hon. Member for Newcastle-upon-Tyne, Central will no doubt interrupt me if he desires. I say that this is a first instalment.

Mr. Short: I must ask the hon. Member to tell us what concessions have been given to the big bulk of old-age pensioners who receive National Assistance.

Mr. Mackie: I have not been fully into that, but I realise that the deputy Leader of the Opposition this afternoon welcomed the provisions in regard to old-age pensioners so far as they went. I associate myself with him 100 per cent. I hope that the concessions, or allowances, or whatever word is most appropriate to use, are only a foretaste of what will be forthcoming if the present Government continue in office and if their handling of our financial affairs continues to be as satisfactory as it has been up to the present. Of course I make the reservation about the credit squeeze.
Before I was interrupted by the hon. Member for Newcastle-upon-Tyne,


Central—I make no objection to his intervention—I was about to say that I welcome the concessions to theatres and, more particularly, to small cinemas. By having made that concession, the Chancellor of the Exchequer has acted very wisely indeed. The deputy Leader of the Opposition congratulated him this afternoon. Therefore, it would not be out of place for me also to offer my congratulations.
I speak for a rural area. The hon. Member for Newcastle-upon-Tyne, Central speaks for an urban area, but he will agree that in rural areas it is essential that the workers, who have very little opportunity for distraction, should have an opportunity to see cinematograph displays at an admission charge which is not unduly high. During the last two or three years I have had many representations on the point from cinema managers in my constituency. I am not throwing any bouquets, for I have never done that during the twenty-six years that I have been a Member of Parliament, but I think that this afternoon the Chancellor went a great way towards meeting the reasonable claims of those people.
Subject to my reservation regarding to the credit squeeze, I am very pleased to welcome the Budget proposals.

9.56 p.m.

Mr. Frank Allaun: I do not wish to follow up the remarks of the hon. Member for Galloway (Mr. Mackie), because I want to deal with the fundamental issue of the Budget. It is a rich man's Budget and one which will never be forgiven by the old-age pensioners. The Chancellor has ladled out caviare to the man on £2,000 a year, but not a sausage to the man on £2 a week. The right hon. Gentleman is giving to those with imagined need, but giving

nothing to those with biting, desperate need.
Members of Parliament are sent to the House of Commons to better the lot of the people. By that, surely we mean the poor and the weak, because those in other sections of the community have obviously been able to do without our help. Surely, to overlook the lot of the poor and to help the rich contradicts the principles on which we were sent here.
We hear a great deal about the Welfare State, but if the Chancellor ever goes round the back streets of our cities he will find that the Welfare State still has a mighty long way to go. Even the foundations of the Welfare State are now being destroyed. There is bitter poverty, particularly among old-age pensioners. Hon. Members must agree that they are the worst hit; indeed, they are the "submerged tenth" of 1957.
What will the old-age pensioners be thinking this evening as they listen anxiously to the news? I have here this month's issue of the "Old-Age Pensioner", the organ of the National Federation of Old-Age Pensions Associations. Its leading article states:
 What will the Budget give? Pensioners are most concerned. Budget Day, on 9th April, is awaited anxiously by the whole nation but by no section more animatedly than the old-age pensioners. They wait with bated breath and fluttering hearts for action by the Chancellor of the Exchequer that will bring immediate help to this vast army of veterans who have materially assisted to make the country great, rich and prosperous, but who have been left far behind in the inflationary cost of living 
The article goes on —

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Resolutions to be reported Tomorrow.

Committee also report Progress; to sit again Tomorrow.

DRAINAGE SCHEME, THEDDLETHORPE

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooman-White.]

10.1 p.m.

Mr. Cyril Osborne: I am very grateful to you, Mr. Speaker, for giving me permission to raise what, on such a day as this, must seem a tiny matter but one which is, to my constituents, a matter of great importance. Today, we have discussed a Budget involving the raising of £5,387 million; tonight, I am pleading for the expenditure of only £4,000—well below a millionth part of that Budget figure.
On 18th March last I asked my right hon. Friend the Minister of Agriculture, Fisheries and Food whether he would now permit the completion of the Theddlethorpe drainage scheme, on which already £100,000 has been spent, and which requires only another £8,000 to complete. My right hon. Friend replied that he could not grant this permission because he had to have
… regard to the Government's general policy of restricting capital expenditure.
I pointed out in a supplementary question that the 1,500 acres directly affected and the 2,000 acres indirectly affected are producing only about two-thirds of the possible crops and that in a period of three or four years the additional food produced, if the drainage scheme were allowed to be completed, would more than pay for the scheme. My right hon. Friend rather astonished me by replying that he still could not allow the scheme to go on, but would remind me
… that grants have not been brought to a standstill.
He added:
… during the past twelve months, we have approved schemes in Lincolnshire alone amounting to £450,000."—[OFFICIAL REPORT, 18th March, 1957; Vol. 567, c. 4.]
Whatever I now say, I say without any personal animus against either my hon. Friend or his Minister, but what seems so extraordinary to me is that the Minister has, in the last 12 months, agreed to new schemes in Lincolnshire involving an expenditure of £450,000. I

suppose that those schemes will not be productive for 12 months, two years or three years, yet here is a scheme on which £100,000 has already been spent, and which could be completed by the expenditure of only £8,000.
Of that sum, £4,000 would be raised locally, so that the Ministry has to find only another £4,000. It seems absurd— bureaucracy gone mad—to sanction new schemes which will take years to come to fruition, and yet to prevent a scheme from being completed that requires only this very small amount of money to be spent. The excuse that in the county this extra £450,000 has been sanctioned does not cut any ice at all with my constituents. They feel very strongly that the whole thing has not been wisely handled.
During the August holiday of last year, in the small village of Theddlethorpe— the centre of a large agricultural area— there was a meeting of the farmers, at which about 30 of my constituents turned up. They felt very discouraged and disheartened at what the Ministry had done, and passed the following resolution:
 This meeting strongly urges the N.F.U. "—
the meeting had been called by the local branch of the N.F.U.—
should fight for the reversal of the Government policy of stopping drainage grants. The land at Theddlethorpe which is at present waterlogged is a national asset which is being squandered by such a policy.
Here we have the farmers, the representatives of the Ministry, and the N.F.U. men responsible there, and they all agreed that the land, which is very good agricultural land, was waterlogged and could be made to produce really good crops. Yet nothing is done, for want of a measly £4,000 from the Ministry. For the life of me, I cannot understand why it should not be granted. To say that it is because of the credit squeeze just will not stand thinking about.
I had a letter from the Secretary of the Louth Branch of the N.F.U. who sent the resolution to me. In it he said:
The many farmers who spoke at the meeting were very concerned at the way they appear to have been left deserted with a half finished scheme.
This is a question which my hon. Friend must answer. These men feel that they have been let down, that the scheme, which is a good one, seems to have been


overlooked, and that the Ministry is hiding behind a general directive from the Treasury. They feel, if I may say this to my hon. Friend, that his Department is allowing the Treasury to decide agricultural policy; and the Treasury "boys" are the last people who should be allowed to decide what is good for agriculture.
On 22nd October, my agent received from the engineer of the Alford Drainage Board, which is responsible for the scheme, a letter about this matter. I should like to read two passages from it. The engineer said:
At the present time, although the pumping station at Theddlethorpe has been provided, water from the area in question cannot get to these pumps on account of the condition of the drains, some of which have not been dredged for about 20 years.
The Ministry should look into this. It is no good asking farmers to produce more and more food if the land from which it is to be produced is neglected in this sort of way.
The engineer goes on to say:
The Ministry officials agreed that a good case had been put forward from the agricultural point of view …
From what point of view do they want it justified, so that this tiny sum of money may be granted to finish the scheme?
The letter continues:
… but that this was not sufficient to justify any change of policy in restricting the capital expenditure of the drainage authorities ".
From what point of view does the Ministry want it justified? I should have thought that the growing of food was about the most important thing which the Ministry of Agriculture could want.
A letter, dated 1st October, was sent by an official of the Ministry to the Chairman of the Alford Drainage Board. He said:
 I fully appreciate the points you made to me about the desirability of the scheme from a food production point of view …
I should have thought that it would damn any Ministry official to say, first, that he agreed that the scheme is justified from a food production point of view, and then run round the skirts of the Treasury officials and say that it cannot be afforded. All I am asking for is £4,000.
… and the fact that if the work is deferred you may well have to dispose of skilled labour which will be difficult to get back at a later stage.

That is another reason for going on with the scheme. If this sort of decision were arrived at in private business, somebody would quickly get the sack, or the firm would "go broke." Then he goes on to say:
 There is no difference between us about the need for the work.
Well, why cannot they get on with it? All I want is £4,000.
The letter continues:
 But, as you must know, the Government has decided that capital expenditure must be drastically reduced in order to curb the inflationary trends in the national economy.
This is just bunkum; it just is not true that this expenditure will affect the inflationary trend in the national economy, because if, as a result of finishing this drainage scheme, food production were increased, it would, instead of acting in an inflationary manner, act in exactly the opposite way, for we should then be growing food which we should otherwise have to get from abroad. The writer of the letter, however, adds:
 All I can offer at the present time is:o give your proposal a high priority when this relaxation is possible.
That letter was written six months ago. Is it not time permission was given, so that something further can be done?
As my hon. Friend will know, a meeting was held some weeks later at Grantham, and his right hon. Friend the Minister was questioned by the farmers there about this very scheme. He made a half-promise to the farmers assembled at Grantham to whom he talked—and I believe that my hon. Friend was also present—and it was stated that this would be given first priority. It seems ridiculous to keep saying, "No" and I hope that tonight my hon. Friend will say, "Yes", because I want to quote two more bits of evidence supporting the claim which I am trying to make.
There is a letter written from the engineer of the Board to the Lincoln office, and dated 20th June, in which the local engineer makes these two points:
 The scheme is necessary to obtain the advantages of the lowered water levels in the main drains under the present Northern Scheme, and some of the drains have not had any work carried out on them apart from rodding for some fifteen years.


It is fantastic that it has been neglected so long. The letter goes on:
 A great deal of agricultural land will obtain considerable benefit from the scheme, and the work will transform areas which are now frequently waterlogged into productive arable land.
Surely, that is an important point—that this waterlogged area will be turned into productive arable land. In three years' time, the extra crops that we get from these 3,500 acres would more than pay for the scheme, and when the Minister says, on behalf of the Treasury, "We cannot afford this money," the local people can see other workers putting down kerbstones along the sides of country lanes—unproductive and unnecessary work, which is costing labour and materials which might well be put into this type of scheme.
They also see additional petrol pumps being put up everywhere, or new "pubs" erected, all of which work could be delayed, yet here is a scheme that is to pay for itself, that will produce food that we want, and which is being held up after we have spent nearly £100,000 on it. My constituents just cannot understand why the Ministry refuses to agree, and neither can I.
Finally, I would like to put this to my hon. Friend. In the Economic Survey, which we have been discussing today in another context, on the back page, certain figures are given for agricultural production. The Survey says:
 To help the industry "—
that is, the agricultural industry—
 to increase its working efficiency in a direction where there is great room for improvement a new scheme of Treasury grants at the rate of 33⅓: per cent. is to be introduced for investment in fixed equipment and long-term improvement to land.
It is useless finding a new grant for investment in fixed equipment and long-term improvements to the land, unless, first, the land is properly drained. It is no good putting either up-to-date machinery or buildings on land that is waterlogged. It is from properly drained land that we will get the extra production. The farmers are tired of waiting. They have protested through the N.F.U., and through their local organisations, and I have done my best for them, but every time we are told, "No".
In the Financial Statement published today, showing how much money has been expended, I was astonished to find that during the past year the National Coal Board was granted net capital expenditure of £26 million, while loans to other nationalised industries totalled £284 million and railway finance loans accounted for £52 million. None of these items will be as quickly productive as the small scheme for which I am pleading tonight. There may be other similar schemes throughout the country, but this one, surely, ought to have priority over everything. If the Treasury grants loans amounting to £350 million for capital expenditure which will not be productive for many years, there cannot be any reason why my hon. Friend should not press his colleagues at the Treasury to allow this scheme to be completed.
My hon. Friend has, I think, rather been put off by the Treasury refusal on general grounds. If the Treasury has not already given him permission, will he not go to the Treasury tomorrow and say that that is not good enough? It is hindering the work that he is supposed to be doing.
This morning, I received a letter from the Assistant Secretary of the Lincolnshire Branch of the National Farmers' Union, supporting the plea which I am making tonight and saying:
The Lincolnshire County Executive sent the Minister a personal telegram at its annual general meeting in January deploring the inclusion of land drainage in the credit restriction arrangements. This county has been a very strong supporter of the Heneage Report on drainage. In view of the difficulties of its implementation, we have subsequently recommended that certain sections referring, in particular to old parish drains and water courses, should be put through by other means. We believe that the Minister is in favour of this step.
I commend these words to my hon. Friend:
 Our farmers are unwilling to accept the need for maintaining restriction on expenditure when they see so many other instances of 'open-purse' spending on items which could be more correctly delayed, e.g., hard tennis courts (schools for the use of).
I think my hon. Friend agrees that I have a legitimate cause to plead, that I am not asking for a lot and that he and his Department would get a great deal of return if only we could have this scheme completed. It would please my


constituents immensely and would put heart into them.
Nothing is more discouraging to a farmer than to do half his work on land and then see the result of his labours lost because the land is waterlogged. I therefore plead most earnestly with my hon. Friend, if he cannot say "Yes" to me tonight, at least to see the Treasury tomorrow and not leave until the Treasury has said, "Yes, the scheme can be completed."

10.19 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): My hon. Friend the Member for Louth (Mr. Osborne) has put his case with his usual forcefulness and persuasion, and I am sure that his constituents have reason to be grateful to him for the very clear manner in which he has put this most important matter before the House.
As a Lincolnshire Member, I also am well aware of the very important part that drainage plays in the farming economy of Lincolnshire, and I have a very natural sympathy with a great deal of what my hon. Friend has said. I know from my hon. Friend's own keen interest in sound national financial control that he will realise that this matter has to be viewed against the national background, of which we were reminded in this Chamber only this afternoon when my right hon. Friend the Chancellor of the Exchequer was making his Budget speech. My right hon. Friend made clear once again the need to continue the credit squeeze, which we are all willing to cheer in principle but which, when it affects particular items which impinge on us in our constituencies or in other ways, we are not so keen about.
My hon. Friend quoted the words of the then Chancellor in February, 1956, when he introduced the credit squeeze and talked of curbing the inflationary trend in the national economy. That was the time when it was decided drastically to reduce capital expenditure by local authorities and by Government Departments in many ways. It was in accordance with that policy, speaking in general terms for the moment, that it was decided that approval should not be given to

further schemes of land drainage improvement works, except where they could be justified by immediate considerations of health, safety, or other public interest. That is why, in the letters which my hon. Friend quoted, the point is made that agricultural interest was clearly established but even so consent could not be given because the scheme did not come into the categories which I have just mentioned and which were laid down at that time.

Mr. Osborne: Surely, if we do not improve the food supply and people go hungry their health will deteriorate.

Mr. Godber: That is a most interesting point, but I am sure that my hon. Friend would not suggest that people are going hungry in Lincolnshire at present. I should not have time to go into the details if I were to follow him on that broad point.
That policy has had the effect, undoubtedly, of postponing the carrying out of many works for the improvement of the drainage of agricultural land, which we and my Department want to see carried out and are anxious to see carried out as soon as possible. Internal drainage boards are the authorities concerned essentially with drainage schemes designed to benefit agriculture. They have felt the effect of the restriction policy far more than have the river boards, which are concerned as much with urban drainage improvements as with purely agricultural drainage improvements. Since the then Chancellor's request, schemes from river boards and internal drainage boards to a total value of £3 million have been approved, and schemes to the value of £1¼ million have been deferred. The deferred schemes have been those mainly designed purely for the benefit of agriculture.
That is the general picture. As to the Theddlethorpe scheme, I would remind my hon. Friend that it is a subsidiary scheme which follows a much larger comprehensive scheme, undertaken jointly by the Lincolnshire River Board and the Alford Drainage Board. The river board's part involves improvement to main drains and the construction of pumping stations at an estimated cost of £158,000. The drainage, board's part of the work involves the erection of a pumping station at Theddethorpe and the


regrading of main and subsidiary drains at an estimated cost of a further £92,000. The area of benefit is roughly 23,000 acres. It is, therefore, a pretty substantial scheme and the bulk of the work is almost completed.
The subsidiary scheme is much smaller. It was submitted only last May. It involved the regrading of certain subsidiary drains, the replacing of culverts and the fencing of grassland in the Theddlethorpe and Withern areas. The estimated cost is just over £7,000 and the area to benefit is roughly 1,500 acres. That area is part of the 23,000 acres that benefit from the whole scheme. The subsidiary scheme is to bring the 1,500 acres into benefit from the Theddlethorpe pumping station and to take advantage of the lower water levels now achieved in the main drains.
It is also proposed, as part of the scheme, to connect the Theddlethorpe and Trusthorpe pumping areas, and that is another valuable safeguard. My point is, however, that this is not part of the original scheme, as my hon. Friend suggested; it is an extension to take advantage of certain benefits which have flowed from the original scheme.
Whilst I do not dispute that it is of great value and deserves to be carried out, it must be realised that this extension was only submitted in May last year. It would be untrue to suggest that the main scheme is valueless unless this work is carried out because it is only an improvement. The Theddlethorpe scheme is closely allied to the other scheme but it cannot be said to be an integral part of it. It is solely for agricultural improvement—and, as such, it falls within the scope of the ban to which I have referred earlier.
For many years the Government have given financial help to drainage authorities and farmers to facilitate land drainage

improvement. My right hon. Friend and I regard good drainage as a fundamental factor for securing full and efficient agricultural production. I cannot over emphasise that, but the present restrictions on capital expenditure are holding up work which we all agree is highly desirable, and it has not yet been considered practicable to lift the restrictions on these new land drainage schemes.
We have this matter very much in mind, and we are hoping that it will not be too long before some easing of the restrictions is possible. I can assure my hon. Friend that we are anxious to get them lifted quickly, and as soon as we can do so the schemes in Lincolnshire —the one which my hon. Friend has mentioned and another which I have very much in mind because it is in my own constituency—will be in the forefront of those which will have priority as soon as a change in policy can be made. Until that change of policy can be made we cannot allow these schemes to go forward, because they do not fall within the categories coming under the existing arrangements, but we will push them as soon as we can.
The only assurance that I can give my hon. Friend now is that this is very much in our minds and that we are as keen as he is to ensure that agricultural land is given every possible help to produce efficiently for the national advantage. We realise the benefits that will come from increased production on it and we want to see it in full use. We have had to play our part in maintaining the national credit squeeze, which has done good throughout our economy, and it is in that context that I ask my hon. Friend to be a little more patient with us over this matter.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes past Ten o'clock.